Donald Trump’s victory in the 47th U.S. presidential election has put domestic semiconductor companies on high alert regarding potential policy shifts under the Trump administration.
Trump’s repeated criticism of the CHIPS Act, a semiconductor support law championed by the Biden administration, is at the forefront of these worries. Industry insiders fear that Trump may either scrap the law entirely or modify it in ways that could disadvantage South Korean firms.
The CHIPS Act was designed to inject $52.7 billion over five years into the U.S. semiconductor industry, offering $39 billion in production subsidies and $13.2 billion for R&D support to companies establishing factories and research facilities on American soil. However, Trump has argued that these subsidies primarily benefit wealthy corporations, singling out South Korean and Taiwanese firms. He has suggested moving away from Biden’s “carrot” approach of subsidies, instead favoring a “stick” strategy involving higher tariffs to pressure foreign companies to build U.S-based facilities.
Initially, industry analysts believed that even if Trump won, a Democratic majority in Congress could prevent major changes to the law. However, with Republicans now controlling both chambers, the possibility of substantial amendments or outright repeal of the CHIPS Act has increased.
This uncertainty particularly impacts Samsung Electronics and SK Hynix, which had anticipated receiving $6.4 billion and up to $450 million in subsidies and tax benefits, respectively, for their multi-billion dollar investments in the U.S. The Samjong KPMG Economic Research Institute warns that Trump’s stance could lead to its modification or reduction in subsidies, increasing external uncertainties for South Korea’s semiconductor industry.
Some analysts suggest that if Trump implements tougher policies against China, South Korean companies could gain a competitive advantage. For example, expanded U.S. restrictions on advanced AI semiconductors might give Korean companies a competitive edge over their Chinese rivals.
However, concerns persist that expanded U.S. restrictions could impact South Korean companies with manufacturing facilities in China, potentially disrupting operations at Samsung and SK Hynix’s Chinese plants.
The Samjong KPMG Economic Research Institute advises Korean firms to strengthen flexible supply chains to manage risks amid U.S.-China tensions. The institute also recommends focusing on advanced semiconductor technology to capitalize on potential opportunities arising from further restrictions on China.
Trump’s electoral victory was decisive, with wins in battleground states like Georgia and North Carolina and even key votes in Philadelphia, enabling him to surpass the 270 electoral vote threshold needed to secure the presidency.
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