How should Korea’s chip sector respond to US push for memory fabs?

The Trump administration's push for increased semiconductor investment in the US aims to establish advanced manufacturing centers domestically, solidifying US control over the artificial intelligence chip supply chain. Notably, the US lacks adequate domestic capacity to produce memory semiconductors, a critical barrier in AI development. Consequently, Washington is intensifying efforts to entice investment and localize its supply chain.

Industry professionals argue that South Korea's memory sector could face challenges due to US pressure, potentially stifling investment and disrupting companies' resource allocation. Presently, Micron Technology's only operational memory facility in the US is its fab in Manassas, Virginia. According to Micron's website, out of the total memory chips globally, only about 2% are manufactured within the US, all at their Manassas facility.

Samsung Electronics and SK Hynix, the leading memory semiconductor market players, are investing in the US to construct foundries (contract semiconductor manufacturing) and advanced packaging facilities. Samsung Electronics' foundry fab in Taylor, Texas, is slated to commence production within the year. SK Hynix's packaging fab in West Lafayette, Indiana, began construction following its groundbreaking ceremony at the end of August.

The US administration's heightened concern stems from China's significant expansion of memory production capabilities, with CXMT and YMTC emerging as the sector's main contenders. Supply shortages compel leading American firms like Apple to procure memory chips from China. The rapid advancement of AI is anticipated to escalate the demand for memory chips, further intensifying the US' urgency to expand and localize domestic memory production.

In response to these developments, Korean semiconductor firms are diligently observing the situation under the Trump administration. While some companies have already announced their intentions to invest in large-scale memory fabs in Yongin and the southwestern Honam region, they cannot disregard the demands of one of the largest memory chip purchasers.

Professor Lee Jong-hwan of Sangmyung University's Department of System Semiconductor Engineering highlighted the multifaceted considerations companies must weigh when investing in the US, including labor costs, cost competitiveness, investment affordability, and technological leakage concerns. He recommended that the South Korean government provide a comprehensive explanation of the situation to the US.