Executive Summary
Since the start of Trump’s second administration, there have been major changes to the approach concerning foreign relations, policies and trade. However, one objective remains consistent and that is to boost US domestic technological development, specifically the advancement of the AI semiconductors supply chain and to centralise the broader chip markets through government issued incentives. The intention to build a resilient semiconductor supply chain is shared across countries that possess the capacity to manufacture these products, which include Taiwan, Japan, China and the Republic of Korea (ROK). Among them, relations between the US and South Korea’s chip market might develop a more sophisticated dynamic, as the current ROK regime, led by Lee Jae-Myung, sought deeper economic ties with APEC (Asia-Pacific Economic Cooperation) members, particularly China, to derisk from the uncertainty of Trump’s foreign policies (Howell, 2025). Whilst the US will be expecting the end of the Advanced Manufacturing Investment Credit in 2026 and could face stagnation in foreign investments to the market and threatens its R&D capacity, according to the Semiconductor Industry Association (2025). How both technological powers should navigate through the changing geopolitical dynamic whilst maintaining the advantage of their relationship, and the benefits of their respective semiconductor markets, should be among their priorities.
Introduction
The Bank of America estimated the market size of HBM chips could reach a 58% increase in 2026. That marks the commencement of a new chapter for the competition of who shall be the leading force in the AI semiconductor industry in the upcoming years. The Republic of Korea and the US have then made several major announcements regarding their approach to the advancement of the industry. On January 13, 2026, South Korean semiconductor manufacturer SK Hynix announced a $13 billion investment in South Korea to build facilities for the packaging of its high-bandwidth memory (HBM) semiconductors. The investment will be the second largest the organisation has made and could catch up with the rising supply for semiconductor equipment and meet the demand for HBM chips (Reuters, 2026). This investment dwarfed the previous $4 billion deal which was accompanied by a $450 million funding from the US and a $500 million loan under a non-binding Preliminary Memorandum of Terms (PMT) made with the Biden Administration, to build a similar packaging facilities in Indiana in August 2024 (Wu, 2024).
The US, on the other hand, published a fact sheet addressing its “Action on Certain Advanced Computing Chips to Protect America’s Economic and National Security” on January 14. The fact sheet points out the possibility to broaden restrictions on imports of semiconductor, its manufacturing equipment and their derivative products in an attempt to reduce reliance on foreign supply chains and to investigate those that “threaten to impair national security” (The White House, 2026).
Discussion
Given the decision made by both major advanced chip manufacturing states, it is observable that they seem to have moved from comprehensive partners to competitors in the advanced chip market to pursue their respective version of economic security. The previous administrations of both states (Biden & Yoon) shared a consensus of building an “alliance-centered” semiconductor supply chain to protect “national security” in the face of China’s rivalry. The commitment to foster US-ROK economic relations was then shown during the Biden-Yoon Summit in May 2022, and it is also where the first acknowledgement of expanding the conventional national security to include economic development was addressed (Lee, 2023). Despite the effort the US had made, public speculation of the US is ultimately pushing the agenda to secure semiconductor hegemony has grown (Ibid.). The agenda was later reflected in the US’s CHIPS and Science Act, which incentivises semiconductor manufacturers to invest in the US market by granting funds, but pushes investors to decouple from the Chinese market and to prohibit partners to conduct joint programmes with their listed “foreign entities of concerns” (Shivakumar et al., 2023).
The Act led to partners including SK Hynix, Samsung and TSMC to halt their projects in China. SK Hynix shut their $20 billion production down in Dalian, China, due to the agreement being in place (Wu, 2024). Thus, resentment to the US’s approach increases among affected powers, whilst the US’s resolution to build their semiconductor empire solidifies after the shifts of administrations. The newly elected ROK leader, Lee Jae-Myung’s counterbalancing policies is the result of US’s economic nationalism which hinders the trustworthiness of the US as a reliable economic partner. Moreover, with the release of government fact sheets mentioned above, tension is likely to tighten, as the ROK responded that they will keep monitoring the regulations to minimise any adverse development (Reuters, 2026).
Conclusion
The concept of threats to national peace and security has expanded in the past few years to encompass the concerns stirred by economic and technological rivalry. Thus, the relations between states have another aspect to consider, which is their interests to whether or not be the hegemon in the field of emerging technologies, specifically AI semiconductors. In the case of South Korea and the US chip industry development, partners have become rivals. In order to navigate through such a dynamic, a key consideration should be made – evaluating which national security should be prioritised: The US is aware of their need for a more resilient chip supply chain, yet different from the Biden Administration which focuses on incentives, Trump’s administration enlarges the interests of making America the ‘Leader’ of semiconductor industry and uses trade regulations to push bilateral negotiations. In the US Department of Commerce (DOC) fact sheet released on January 15, it reflects the interest in re-establishing American Semiconductor ‘Leadership’ through agreement on trade and investment with Taiwan. As Taiwan national security concerns the tension across Taiwan Strait, they are more receptive to US demands in exchange for their support. Whereas, the ROK decided to shift from their rivalry with China to focusing on chip productions, resulting in the misalignment with the US.
Reference List
Department of Commerce. (2026). Fact Sheet: Restoring American Semiconductor Manufacturing Leadership Through an Agreement on Trade & Investment with Taiwan. [online]. Available at: https://www.commerce.gov/news/fact-sheets/2026/01/fact-sheet-restoring-american-semiconductor-manufacturing-leadership
Howell, E. (2025). How South Korea can balance its US commitments with global engagement: The key foreign policy challenges for the Lee government. [online] Chatham House. Available at: https://chathamhouse.soutron.net/Portal/Public/en-GB/RecordView/Index/206863
Lee, S., H. (2023). U.S. Semiconductor Policy and South Korea: A Delicate Balancing Act between National Priorities and International Collaboration. Asia Policy, 18(3), pp. 101-137
Reuters (2026). South Korea to keep monitoring US chip tariffs to minimise impact, industry minister says. [online]. Available at: https://www.reuters.com/world/asia-pacific/south-korea-keep-monitoring-us-chip-tariffs-minimise-impact-industry-minister-2026-01-15/
Reuters (2026). SK Hynix to invest nearly $13 bln in chip packaging plant in South Korea. [online]. Available at: https://www.reuters.com/world/asia-pacific/sk-hynix-invest-nearly-13-bln-chip-packaging-plant-south-korea-2026-01-13/
Shivakumar, S., Wessner, C., and Howell, T. (2023). “Guardrails” on CHIPS Act Funding to Restrict Investments in China May Restrict Participation in CHIPS Act Incentives. [online] Center for Strategic and International Studies. Available at: https://www.csis.org/blogs/perspectives-innovation/guardrails-chips-act-funding-restrict-investments-china-may-restrict
Semiconductor Industry Association. (2025). SEMICONDUCTOR TECHNOLOGY ADVANCEMENT & RESEARCH (STAR) ACT Enact H.R. 802 to ensure the U.S. remains a competitive destination to invest in semiconductor research, design, and manufacturing. [online]. Available at: https://www.semiconductors.org/chips/
The White House. (2026). Fact Sheet: President Donald J. Trump Takes Action on Certain Advanced Computing Chips to Protect America’s Economic and National Security. [online]. Available at: https://www.whitehouse.gov/fact-sheets/2026/01/fact-sheet-president-donald-j-trump-takes-action-on-certain-advanced-computing-chips-to-protect-americas-economic-and-national-security/
Wu, B. (2024). Situation Report 11 August, 2024: US Efforts to Redirect High-bandwidth Memory Semiconductors Supply to the US. [online] Knightsbridge Strategic Group. Available at: https://www.knightsbridgesg.com/post/situation-report-11-august-2024-us-efforts-to-redirect-high-bandwidth-memory-semiconductors-suppl