South Korea woke up Saturday to a familiar kind of trade anxiety—Washington tightening the screws again—but this time, Seoul is telling its chip giants to take a breath. At least for now.
Speaking to reporters, Trade Minister Yeo Han-koo said a new U.S. proclamation slapping a 25% tariff on certain advanced AI chips is unlikely to hit South Korean companies hard in its first phase. The reason is simple: the chips in Washington’s crosshairs aren’t the ones Korea exports the most.
Why Seoul Says the Immediate Impact Is “Limited”
Yeo made it clear the government isn’t celebrating, but it’s also not panicking.
“While the government remains cautious at an early stage, the first-phase measures announced so far focus on advanced chips made by Nvidia and AMD,” he said.
That distinction matters. South Korea’s semiconductor strength lies overwhelmingly in memory chips—DRAM and NAND—produced by companies like Samsung Electronics and SK Hynix. Those products are currently excluded from the tariff list.
“As memory chips that South Korean companies mainly export are not included, the immediate impact is expected to be limited,” Yeo added.
In trade-policy language, that’s about as close as you get to saying “we dodged this one.”
What the U.S. Tariffs Actually Target
The proclamation, signed Wednesday by U.S. President Donald Trump, is framed as a national security measure under Section 232 of the Trade Expansion Act of 1962, the same legal authority used in past steel and aluminum tariffs.
This time, the focus is squarely on high-end AI processors, including:
- Nvidia’s H200 AI processor
- AMD’s MI325X accelerator
These chips meet specific performance benchmarks tied to advanced computing and artificial intelligence workloads.
According to the White House fact sheet, the 25% tariff will be narrowly applied and will not cover:
- Chips imported for U.S. data centers
- Startups using AI hardware
- Non-data-center consumer devices
- Civil industrial applications outside data centers
- U.S. public sector uses
That carve-out is massive, given that U.S. data centers are among the world’s largest buyers of AI chips. More details are outlined in the official White House release: https://www.whitehouse.gov
Why South Korea Isn’t Relaxing Yet
Despite the limited scope, Yeo was careful not to sound complacent.
“This is not yet time to be reassured,” he warned, pointing to uncertainty around a possible second phase of the policy.
That’s the real concern in Seoul. The proclamation explicitly notes that the U.S. may move toward broader semiconductor tariffs in the near future—potentially covering derivative products and a wider range of chips—to push manufacturers to build more fabs on American soil.
For export-driven economies like South Korea, that’s where the real pain could begin.
The 100% Tariff Threat Looming in the Background
Fueling those worries was a blunt warning from U.S. Commerce Secretary Howard Lutnick on Friday.
Speaking at the groundbreaking ceremony for Micron’s new plant near Syracuse, New York, Lutnick said that South Korean and Taiwanese chipmakers that do not invest in U.S. manufacturing could face tariffs of up to 100%, according to Bloomberg.
That’s not a policy yet—but in trade diplomacy, such remarks are rarely accidental.
Micron’s expansion is part of Washington’s broader push, backed by the CHIPS and Science Act, to reshore semiconductor production. Information on that program is available at https://www.commerce.gov/chips.
How Exposed Are Korean Chipmakers?
For now, the numbers suggest limited exposure.
South Korea’s chip exports are dominated by memory products, not the logic-based AI accelerators targeted in this round. Samsung and SK Hynix sell heavily into global supply chains, including to companies like Nvidia—but they are not the ones producing the finished AI processors named in the proclamation.
Here’s a simplified look at where things stand:
| Category | Current Status Under U.S. Tariffs |
|---|---|
| Nvidia & AMD AI processors | 25% tariff applied |
| Memory chips (DRAM, NAND) | Excluded (for now) |
| Data center AI imports | Exempt |
| Consumer & industrial non-AI chips | Exempt |
| Potential future coverage | Unclear |
That “unclear” row is doing a lot of work.
A Broader U.S. Strategy Comes Into Focus
The tariff move follows a nine-month Section 232 investigation into semiconductor imports. The stated goal is to reduce reliance on overseas manufacturing hubs—particularly Taiwan—and push more advanced chip production into the U.S.
From Washington’s perspective, tariffs are leverage. From Seoul’s perspective, they’re a reminder that even close allies aren’t immune when industrial policy takes over.
The U.S. Commerce Department has been explicit about its intent to “incentivize domestic manufacturing,” a stance detailed in official documentation at https://www.commerce.gov.
What Seoul Plans to Do Next
Yeo said the South Korean government will remain in close coordination with industry, monitoring developments and engaging with U.S. counterparts to protect domestic companies.
That likely means quiet diplomacy now—and louder pushback if memory chips or derivative products end up on a future tariff list.
For South Korea, semiconductors aren’t just another export. They’re the backbone of the economy, a major employer, and a geopolitical bargaining chip.
This first round may have missed them. The next one might not.
FAQs
1. What chips are affected by the new U.S. tariffs?
High-end AI processors such as Nvidia’s H200 and AMD’s MI325X.
2. Are South Korean memory chips included?
No, memory chips are currently excluded from the tariffs.
3. Why is the U.S. imposing these tariffs?
The U.S. cites national security concerns and aims to boost domestic semiconductor manufacturing.
4. Could South Korean companies face higher tariffs later?
Yes, U.S. officials have warned that broader tariffs could come in a second phase.
5. What is South Korea’s response so far?
The government says the impact is limited for now but is staying cautious and engaged with industry.
