After taking office, US President Trump has been actively reviving the domestic manufacturing industry and supporting his own people. This has made TSMC, which has a high market share and advanced technology, one of the main targets. Recently, the industry has reported that the Trump administration intends to put pressure on Korean memory to reshape the global memory supply chain.

Trump has repeatedly stressed that Taiwan has taken away the US chip business and is pressing TSMC step by step. Industry insiders analyzed that Asia accounts for 80% of the world's semiconductor production capacity, and Taiwan has the world's number one wafer foundry and packaging and testing industry, so it is naturally the first target of the US; and South Korea also has a market share of more than 70% in memory, especially in HBM (high-bandwidth memory). It is not surprising that the United States suppresses Korean semiconductors. Although there is no official clear policy yet, the market generally believes that once this trend comes true, it will affect the global supply chain map. It is reported that Taiwanese manufacturers have relatively flat exchanges with Korean manufacturers, but have a close relationship with Micron. However, Micron's previous shift to self-built packaging and testing production capacity has caused a lot of impact on related industries; if Trump continues to put pressure on the Korean memory industry, there will be another round of impact.

Tariff plan

Trump's tariff plan puts South Korea's memory chip industry at risk

The Trump administration's plan to impose tariffs of more than 25% on semiconductors is expected to have a significant impact on South Korea's memory chip industry, analysts say. The proposed tariffs will apply to memory chips and foundry services, affecting major players such as Samsung Electronics and SK Hynix, which rely heavily on memory production, and leading foundry operator Taiwan Semiconductor Manufacturing Co. (TSMC). While memory chips are mass-produced and highly sensitive to price fluctuations, foundry services involve custom chip manufacturing to customer specifications and are therefore less susceptible to cost changes.

To avoid the tariffs, companies need to produce semiconductors in the United States. However, Samsung's plant in Austin and its under-construction plant in Tyler, Texas, are dedicated to foundry business, not memory production. SK Hynix is building a semiconductor back-end processing plant in the United States, but no memory chips produced in South Korea and sold in the United States will be exempt from the tariffs. Compounding the challenge is that U.S. chipmaker Micron Technology will begin producing memory at a new plant in Idaho next year. Although Samsung and SK Hynix are exploring potential countermeasures, industry sources say viable alternatives remain limited.

The U.S. government has not yet clarified which countries or semiconductor products will be affected by the tariffs. But if the measures are similar to Trump’s steel and aluminum tariffs, South Korea could be particularly hard hit. Last year, South Korea exported 15.4 trillion won ($10.7 billion) worth of semiconductors to the United States, with memory chips accounting for 79% of the total. Samsung and SK Hynix make DRAM and NAND flash memory in South Korea and China, but nearly 70% of production comes from South Korean factories.

Memory chips

Currently, most of Micron's memory chip production is in Taiwan and Japan.

South Korean chipmakers may not necessarily be at a disadvantage if tariffs are imposed uniformly. However, Micron's plan to increase domestic production brings up a key variable.

The U.S. chipmaker is investing 180 trillion won ($125 billion) to build large memory plants in Idaho and New York. The Idaho plant will start production next year, and the New York plant is expected to start mass production in 2028. A large portion of memory chips sold in the U.S. market may be replaced by Micron products. "There is basically no difference in the quality of memory chips, so even a few cents of price difference will affect purchasing decisions," said an industry official. "If a 25% tariff is imposed, it will be difficult for Korean manufacturers to compete with Micron's production in the United States." For Korean companies, building memory chip plants in the United States is not an immediate option because Samsung and SK Hynix are already focused on expanding their foundry capacity. It takes four to five years to build a new memory plant, and given that their existing memory plants are in South Korea and China, companies must weigh the risk of oversupply.

South Korean memory manufacturers also face increasing technological competition. Micron is closing the gap not only in standard memory chips but also in advanced DRAM products such as high-bandwidth memory (HBM). The company's fifth-generation HBM3E 12-layer chips are reportedly more energy-efficient than its Korean rivals. Although Micron's share of the HBM market last year was only 3% - far behind SK Hynix's 65% and Samsung's 32% - the company plans to increase that figure to 25% this year after winning orders from Nvidia. Some analysts even believe that Micron has surpassed Samsung in certain NAND flash memory technologies. Market research firm TipRanks noted that Micron "does not shy away from direct competition with Samsung and SK Hynix."

The foundry industry is also facing headwinds. TSMC dominates the global foundry market with a 65% share, followed by Samsung (9.3%) and China's SMIC (6%). TSMC produces far more chips in the United States than Samsung, giving it a competitive advantage in supplying chips to U.S. fabless semiconductor companies such as Nvidia and Qualcomm without having to worry about tariffs. In addition, TSMC is working with the U.S. government on a potential acquisition of Intel's foundry business, further strengthening its position in the U.S. market, which would strengthen its position in the U.S. market.

Source: Content from Semiconductor Industry Observation

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