South Korea says US chip tariff to have limited immediate impact

SEOUL: South Korea’s trade minister said on Saturday (Jan 17) that a US proclamation imposing a 25 per cent tariff on certain advanced computing chips would have a limited impact on South Korean companies.

“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,” Trade Minister Yeo Han-koo said.

“Since the memory chips that South Korean companies mainly export are currently excluded, the immediate impact is expected to be limited.”

Yeo cautioned, however, that it was “not yet time to be reassured”, noting uncertainty over when and how a potential second phase could be expanded.

He added that the government would continue to work closely with industry to seek the best possible outcome for South Korean companies.

US President Donald Trump on Wednesday signed a proclamation to address national security concerns related to semiconductor imports, imposing a 25 per cent tariff on certain artificial intelligence chips, such as Nvidia’s H200 AI processor and AMD’s MI325X.

The White House said the tariffs would be narrowly focused and would not apply to chips and derivative devices imported for US data centres – a huge consumer of AI chips – startups, non-data centre consumer applications, non-data centre civil industrial applications and US public sector applications.

The United States, in the near future, may also impose broader tariffs on imports of semiconductors and their derivative products to incentivise domestic manufacturing, according to the fact sheet.

US Commerce Secretary Howard Lutnick said on Friday that South Korean chipmakers and Taiwanese companies that are not investing in the US may face up to 100 per cent tariffs unless they commit to increased production on American soil, Bloomberg reported. Lutnick was at a groundbreaking ceremony for Micron’s new plant outside Syracuse, New York.

The proclamation follows a nine-month investigation under Section 232 of the Trade Expansion Act of 1962 and targets a number of high-end semiconductors meeting certain performance benchmarks and devices containing them for import duties. 

The action is part of a broader effort to create incentives for chipmakers to produce more semiconductors in the US and decrease reliance on chip manufacturers in places like Taiwan.