The U.S. pressures Korean semiconductors to build factories in the U.S., expresses dissatisfaction with South Korea's “Honam Semiconductor Cluster Plan”

The United States is exerting increasing pressure on the South Korean government and enterprises over semiconductor investment, demanding the construction of memory semiconductor production facilities in the U.S. and securing memory supply, while also voicing dissatisfaction with the South Korean government's 800 trillion won Hunan semiconductor cluster plan. The U.S. considers this as reflecting Korea's dual approach—proactive in supporting domestic semiconductor investment but passive when it comes to investing in the U.S.

According to The Chosun Ilbo on August 25, officials from South Korea's ruling party revealed that the U.S. side has recently made explicit demands for Korean semiconductor firms to invest in local memory factory facilities in America and to ensure stable memory supplies. Notably, this is the first time the U.S. has directly referenced the "mega-project" led by the Korean government during investment negotiations, explicitly linking the Hunan semiconductor cluster plan with the delayed investments by Korean firms in the U.S. Korean Minister of Trade, Industry and Energy Kim Jung-kwan also had this topic raised during bilateral discussions in his four-day investment talks in the U.S. starting on the 16th of this month.

The report pointed out that for domestic semiconductor enterprises, this situation means potential double pressure—undertaking the task of constructing the 800 trillion won Hunan cluster while facing heavy burdens from dual investment both domestically and abroad if the U.S. makes an official request for local plant construction.

The U.S. Names Hunan Cluster for the First Time, Ramping Up Pressure

According to the report, a South Korean ruling party official said that during its push for Korean semiconductor firms to invest in the U.S., the U.S. has recently, albeit informally, expressed dissatisfaction with the 800 trillion won Hunan semiconductor cluster plan promoted by the Korean government. The official stated:

"The U.S. demands that our semiconductor firms invest in local memory factory facilities and ensure stable memory supply. Since the announcement of the Hunan semiconductor mega-project, the pressure to invest in semiconductors has notably increased."

This marks the first time the U.S. has referenced the Korean government-led "mega-project" in investment pressure negotiations. The underlying logic is that while the Korean government strongly supports the construction of a domestic semiconductor industry cluster, progress on encouraging firms to invest in the U.S. has been slow, creating a disparity that has drawn American displeasure.

The report further notes that another official added that the U.S.'s dissatisfaction is not with the Hunan cluster project itself, but with the lack of progress on Korean firms' semiconductor investments in the United States.

Investment Negotiations Ongoing, Government Plans to Announce First Batch of Projects in September

According to the report, South Korean Minister of Trade, Industry and Energy Kim Jung-kwan departed for the U.S. on the 16th of this month for a four-day investment negotiation trip, with the semiconductor investment issue being addressed during the visit.

The current stance of the Korean government is that the U.S. semiconductor investment demands are separate from the "$350 billion U.S. investment" agreement signed between the two countries last year, and the two issues should not be mixed. The government plans to announce the first batch of U.S. investment projects at some point in September.

The setting of this timetable indicates that the Korean government is trying to balance responding to U.S. pressure while managing domestic corporate expectations, though specific investment scales and project details have yet to be disclosed.

Enterprises Face Double Burden; Samsung, SK, Hyundai Intensify Meetings with the President

Korean domestic semiconductor companies have expressed increasing concern over investment pressure from the U.S.

If the U.S. formally requests the construction of local semiconductor facilities on top of the domestic 800 trillion won Hunan semiconductor cluster task, the companies involved will bear a massive investment burden both at home and abroad.

Against this backdrop, SK Group Chairman Chey Tae-won held a private dinner with President Lee Jae-myung on the 20th of this month. It is reported that Samsung Electronics Chairman Lee Jae-yong and Hyundai Motor Group Chairman Chung Eui-sun will also sequentially meet with the president in a series of meetings.

The report stated that this intensive interaction between politics and business circles underlines the urgent need of the corporate sector to coordinate pressures from U.S. investment demands and domestic policies.