US threat of 100 per cent tariffs on chip exports rattles S. Korea

But analysts suggest prudence before action as S. Korean firms dominate global market

- Wendy Teo South Korea Correspondent

US Commerce Secretary Howard Lutnick during a groundbreaking ceremony for the new Micron Technology facility in New York on Jan 16. Mr Lutnick had threatened new levies for firms exporting chips to the US. PHOTO: BLOOMBERG

(BLOOMBERG)

Merely three months after South Korea celebrated the securing of a trade deal with the United States to lower US-imposed reciprocal tariffs from 25 per cent to 15 per cent, fresh uncertainty has set in.

At a groundbreaking ceremony for Micron Technology's new semiconductor plant in Syracuse, New York, on Jan 16, US Commerce Secretary Howard Lutnick threatened new levies for companies exporting chips to the US.

"Everyone who wants to build memory has two choices: They can pay a 100 per cent tariff, or they can build in America," Mr Lutnick had said, repeating comments made a day earlier in an interview with CNBC.

Mr Lutnick's comments have sparked fresh concerns in South Korea about the possible impact of such a high tariff on its semiconductor industry, which is the backbone of the country's export-driven growth, making up 20 per cent of total exports and earning it the moniker "rice of the electronics industry".

South Korean chip exports to the US surged 30 per cent in 2025 to hit US$13.8 billion (S$17.6 billion), or 8 per cent of the country's total chip exports, buoyed by demand driven by the artificial intelligence (AI) sector.

It is the country's second-largest export to the US after automobiles.

Despite the concerns, however, analysts are suggesting prudence before action, particularly as South Korean companies dominate the global memory chip market and the US holds only a small share of global chip production, compelling it to import large quantities of the chips it needs.