SILICON VALLEY — At the groundbreaking ceremony for SK hynix's semiconductor packaging plant in Indiana on the 27th of last month, I asked Sen. Todd Young whether he was concerned that American and Korean memory companies would be competing on U.S. soil three years from now. Young replied that competition is a good thing and that the United States likes competition, because competition produces better products. A Republican representing Indiana, Young led the passage of the CHIPS Act, which provides semiconductor subsidies, through Congress in 2022 under the Biden administration.
Micron, the U.S. memory maker, is building fabs in Boise, Idaho, and Clay, New York, shifting cutting-edge memory capacity that had been concentrated in Taiwan, Singapore and Japan toward the United States. When SK's fab goes into full operation in the second half of 2029, the structure is in place for a Korea-U.S. contest over supply of the latest high-bandwidth memory on American soil. SK hynix, which holds more than half of the HBM market, could pose a threat to Micron, but Young made clear it was not a concern for him.
A similar Korea-U.S. matchup is taking shape in the U.S. foundry market. Samsung Electronics will start operating its first Taylor foundry plant in Texas this year, following Austin, to produce Tesla's AI5 chip. It will break ground on a second Taylor plant late this year and begin mass production in 2030. The world's No. 2 foundry is expanding its presence in the home market of Intel Foundry, an American company.
Normally, when a foreign company with a global edge enters a domestic market, it is treated as a threat, because it can take local customers with superior technology and market share. Yet the United States is drawing Korean chipmakers onto its soil because it wants the most advanced semiconductors to be produced in America amid the U.S.-China contest for artificial intelligence supremacy. In other words, Washington is increasingly uncomfortable with HBM and graphics processing units being made in Korea and Taiwan.
Now that Samsung and SK hynix have built plants in the United States, can they breathe easier on tariffs? A bigger wave is coming in two to three years. October 2028, when the clean room at the Indiana fab — the sterile facility where memory packaging takes place — is completed, falls in the middle of the U.S. presidential race. Just as a Republican administration carried on the CHIPS Act begun under a Democratic one, candidates will compete to announce ways to support American companies regardless of party. Nothing rules out pressure to use HBM made by Micron, or to hand AI chip production to Intel. Washington could also impose steep tariffs on Korean-made wafers entering the country, tilting the field toward Micron, which is supplied with American-made wafers.
Korean chipmakers are already fighting an uphill battle on a tilted field. The SK groundbreaking drew only local figures such as the Indiana governor and a U.S. senator, while Commerce Secretary Howard Lutnick, who oversees U.S. industrial and tariff policy, attended in person at the construction site of Micron's mega fab in Clay, New York, a month earlier. It was a signal that the federal government is taking special care of Micron. The Trump administration last year spent $8.9 billion, or 12.0106 trillion won, to acquire a 9.9% stake in Intel, and is pressing for Nvidia and Apple chips to be made at Intel.
Leveling the field completely is unrealistic. Korean companies have little choice but to restore as much balance as they can on their own, through cooperation with state governments and by locking in long-term customers. To avoid being buffeted by tariffs, appropriate allocation of production and a reorganization of supply chains between their facilities split across Korea and the United States are essential. Taking as a cautionary lesson the history of the United States allowing factories to move offshore decades ago, only to see its semiconductor industry decline, the Korean government must also work out support measures.
