Uncertainty is growing again as the Korean semiconductor industry is faced with multiple adverse factors such as strong pursuit by Chinese memory companies and tariff pressure from Trump. (Image courtesy of Yonhap)
SEOUL, Feb. 13 (Korea Bizwire) — As South Korean semiconductor manufacturers pivot toward high-bandwidth memory (HBM) chips in the artificial intelligence era, they face mounting uncertainties from aggressive Chinese competition and potential tariffs threatened by U.S. President Donald Trump.
While analysts suggest that tariff impacts may be limited given the relatively small share of semiconductor exports to the United States and lack of alternative suppliers, the industry’s anxiety is growing amid pressure from low-cost Chinese products.
Trump announced on February 10 that he would “look into semiconductors, automobiles, and pharmaceuticals” for potential tariffs in the coming weeks. This move would challenge the World Trade Organization’s Information Technology Agreement, which currently ensures duty-free trade of semiconductors among member nations.
According to the Korea International Trade Association, South Korea’s semiconductor exports to the United States reached $10.6 billion last year, representing 7.5% of total chip exports – significantly lower than shipments to China (32.8%), Hong Kong (18.4%), Taiwan (15.2%), and Vietnam (12.7%).
However, the semiconductor export landscape is shifting. While exports to China decreased by 3.8 percentage points from 2023, U.S.-bound shipments increased by 2.5 percentage points, driven by U.S.-China tensions and surging American demand for AI chips.
SK Hynix, one of South Korea’s leading chipmakers (Image courtesy of Yonhap)
SK Hynix, one of South Korea’s leading chipmakers, saw its U.S. sales nearly triple to 27.3 trillion won in the third quarter of 2024, accounting for 58.8% of total sales, up from 45.4% a year earlier.
Industry experts suggest that tariffs might primarily target lower-end memory chips where Chinese manufacturers are most competitive, rather than advanced products like HBM, where South Korean firms control about 90% of the market.
“Trump’s message is clear,” said Ahn Ki-hyun, executive director of the Korea Semiconductor Industry Association. “As he suggested during his campaign, he wants to encourage semiconductor manufacturing in the U.S. through tariffs rather than subsidies.”
Meanwhile, Chinese manufacturers are rapidly gaining ground. ChangXin Memory Technologies (CXMT), which held negligible market share in 2020, captured 5% of the global DRAM market last year, according to the Financial Times. The company has expanded beyond legacy products, launching DDR5 server memory and HBM chips in December.
Dan Hutcheson, vice chairman of TechInsights, told the Financial Times that Samsung Electronics finds itself in a “nutcracker” situation, squeezed between SK Hynix and Micron in premium products and CXMT in the low-end market.
Industry observers note that while the situation differs from the 1980s-1990s when South Korean firms displaced Japanese competitors through superior technology, Chinese manufacturers’ government-backed volume strategy poses a significant challenge to the global semiconductor market’s stability.
Ashley Song (ashley@koreabizwire.com)
