Samsung and SK Hynix on Edge as US Commerce Secretary Nominee Questions Chip Subsidies

Samsung and SK Hynix on Edge as US Commerce Secretary Nominee Questions Chip Subsidies
The nomination of Howard Lutnick as the U.S. Secretary of Commerce has thrown Korean semiconductor giants, Samsung Electronics and SK Hynix, into a state of uncertainty. During his confirmation hearing, Lutnick's remarks raised questions about the future of promised U.S. government subsidies intended to bolster Korean firms' investments in American chip manufacturing.
A Shift Towards Protectionism
Appearing before the Senate Committee on Commerce, Science, and Transportation, Lutnick echoed a protective stance towards U.S. trade policies, promising to review existing programs that offer subsidies to foreign manufacturers. This reflects the skepticism of the previous Trump administration towards such initiatives, leading to concerns among the chipmakers about potential delays or cancellations of the subsidies previously promised by the Biden administration.
The Backdrop: CHIPS and Science Act
The Biden administration's CHIPS and Science Act was designed to encourage global semiconductor companies to establish manufacturing plants in the U.S., providing substantial financial incentives. In December preceding Trump's inauguration, the U.S. Commerce Department had committed over $4.7 billion to support Samsung's chipmaking investment in Texas and offered SK Hynix up to $458 million for its plant in Indiana.
Lutnick, however, has not assured continuity of these subsidies. He stated, “We need to study it, but we need to make sure that you get the benefit of the bargain and domestic manufacturing happens in America.” This raises alarms for the involved companies.
The Quest for Domestic Manufacturing
During the hearing, Lutnick emphasized the need to enhance American manufacturing capabilities, arguing, “We want to look at the supply chain and bring that back to America.” He underscored the importance of revitalizing domestic job creation in semiconductor manufacturing, referencing Intel's historic role in the industry. His criticism of countries like Taiwan, specifically targeting TSMC, highlights the broader competitive landscape in global chip manufacturing.
Impact on Korean Companies
Lutnick's statements do not just introduce uncertainty about subsidies but also point toward more stringent tariffs on imports. He articulated concerns about foreign entities, including those from South Korea, that he accused of taking advantage of favorable U.S. trade practices. This sets a worrying tone for companies with manufacturing bases overseas, particularly in Korea. Lutnick mentioned, “Our great allies have taken advantage of our good nature,” signaling a shift in U.S. trade relations with key partners.
Conclusion: A Cloudy Future for Chipmakers
As the situation unfolds, Samsung and SK Hynix are left navigating a cloud of uncertainty regarding U.S. government support for their operations. Lutnick's approach could markedly alter the competitive landscape for semiconductor manufacturing in America and potentially reshape the relationship between U.S. and Korean tech industries. The implications of these developments will require careful monitoring as Lutnick's confirmation and subsequent actions may well determine the fate of the semiconductor supply chain in the coming years.