In 1986, the US humbled Japan’s dominant chip sector. Is Korea next?

In 1986, the United States curbed Japan's dominant position in the semiconductor industry, raising concerns about a similar scenario unfolding in South Korea today. Former SK Group Chairman Chey Tae-won highlighted that if memory prices do not decrease, the US and China will not remain passive observers, a warning reminiscent of Japan's plight four decades ago.

The Korean trade surplus with the US now exceeds $100 billion, a figure previously unattained by Japan, and fears are mounting that Korea's semiconductor sector could face pressure from the US. In 1986, Japan's market share of semiconductors dropped drastically from 50% to under 20%, thanks to the US-led agreement. The US introduced a fair market value system, forcing Japan to increase foreign-made chip imports.

As a result, US tariffs led Japan's global market share to plummet. In the present day, Korean memory semiconductor prices have surged due to the AI investment boom, sparking a class-action lawsuit against Samsung Electronics, SK Hynix, and Micron. US policy shifts may see targeted tariffs based on the decision to build domestically or face higher costs in entering the US market.

Despite the possibility of alternatives like Taiwan's TSMC, the US may struggle to extract concessions from Korea as it did with Japan, given the crucial role of Korean memory semiconductors in AI infrastructure for American tech giants.