US Pressures South Korean Semiconductor Firms to Build Plants in US, Expresses Dissatisfaction with South Korea's "Honam Semiconductor Cluster Plan"

The United States is exerting increasingly strong pressure on the South Korean government and businesses regarding semiconductor investments, demanding the construction of memory semiconductor production facilities on US soil and guaranteed memory supplies. Simultaneously, the US has expressed dissatisfaction with the South Korean government-led 800 trillion South Korean won Honam Semiconductor Cluster Plan, arguing that this move reflects a dual attitude where South Korea is proactive in supporting domestic semiconductor investment but passive in investing in the US.

According to a report by South Korea's Chosun Ilbo on August 25, officials from South Korea's ruling party revealed that the US has recently explicitly required South Korean semiconductor companies to invest in local memory factory facilities in the US and ensure stable memory supplies. Notably, this is the first time the US has explicitly mentioned a South Korean government-led "mega-project" while pressing for investments, directly linking the Honam Semiconductor Cluster Plan to the issue of delayed investments by South Korean firms in the US. During South Korean Minister of Trade, Industry and Energy Kim Jung-kwan's four-day visit to the US for investment negotiations starting on the 16th of this month, these issues were also raised in bilateral consultations.

The report states that for domestic semiconductor companies, this situation implies potential dual pressure—while undertaking the construction task of the 800 trillion South Korean won Honam Cluster, if the US formally demands the construction of factories in the US, companies will face the heavy burden of investing on both domestic and foreign fronts.

US Explicitly Names Honam Cluster for First Time, Escalating Pressure

According to reports, officials from South Korea's ruling party stated that the US recently expressed dissatisfaction informally with the South Korean government's promotion of the 800 trillion South Korean won Honam Semiconductor Cluster Plan while requesting South Korean semiconductor companies to invest in the US. The official stated:

"The US requires our semiconductor companies to invest in local memory factory facilities and ensure stable memory supplies. Since the announcement of the Honam Semiconductor mega-project, pressure on semiconductor investments has significantly intensified."

This is the first time the US has mentioned a South Korean government-led "mega-project" in investment pressure negotiations to date. The underlying logic is that the South Korean government is vigorously supporting the construction of domestic semiconductor industrial clusters, yet progress in promoting corporate investment in the US has been sluggish, causing US dissatisfaction due to this disparity.

The report pointed out that another official added that US dissatisfaction is not directed at the Honam Cluster project itself, but rather at the failure of South Korean companies' semiconductor investment plans in the US to materialize.

Investment Negotiations Continue; Government Plans to Announce First Batch of Projects in September

According to reports, South Korean Minister of Trade, Industry and Energy Kim Jung-kwan departed for the US on the 16th of this month for four days of investment negotiations, during which semiconductor investment issues were also addressed.

The current stance of the South Korean government is that the semiconductor investment requests made by the US are separate issues from the "$350 billion investment in the US" agreement signed by the two countries last year, and the two should not be conflated. The government plans to announce the first batch of investment projects in the US at some point in September.

The setting of this timeline shows that the South Korean government is attempting to strike a balance between responding to US pressure and managing domestic corporate expectations, although specific investment scales and project details have not yet been disclosed.

Companies Face Dual Burdens; Samsung, SK, and Hyundai Hold Intensive Meetings with President

South Korean domestic semiconductor companies have expressed growing concern over investment pressure from the United States.

If the US formally demands the construction of local semiconductor facilities in the US, superimposed on the domestic construction task of the 800 trillion South Korean won Honam Semiconductor Cluster, related companies will simultaneously bear enormous pressure from investments on both domestic and foreign fronts.

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 hold a series of meetings with the president in succession.

The report states that this intensive political-business interaction reflects the urgent need of the business community to coordinate responses to US investment pressure with domestic policies.

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