Lutnick warns some South Korean, Taiwanese firms may face 100% chip tariffs unless they invest in US

[NEW YORK] US Commerce Secretary Howard Lutnick said South Korean memory 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, as the Trump administration ramps up calls for additional foreign investment.

Following a groundbreaking ceremony for a new Micron Technology plant outside Syracuse, New York, Lutnick said that potential levies spelt out under a trade accord with Taiwan could also affect chipmakers from South Korea.

“Everyone who wants to build memory has two choices: They can pay a 100 per cent tariff, or they can build in America,” Lutnick said on Friday (Jan 16) in response to a reporter’s question, without naming any particular companies. “That’s industrial policy.”

Lutnick’s comments echoed a warning on Thursday following the signing of the Taiwan trade deal, which grants quota-based tariff relief to companies committing to investing in US-based manufacturing. “If they don’t build in America,” Lutnick told CNBC, “the tariff is likely to be 100 per cent.”

For now, President Donald Trump is holding off on tariffs on most foreign-made semiconductors, instead asking Lutnick and US Trade Representative Jamieson Greer to negotiate with trading partners on reducing American reliance on chip imports. Trump may announce new tariffs and an accompanying offset programme to incentivise domestic manufacturing “in the near future,” the White House said earlier this week.

Micron competes with South Korea-based Samsung Electronics and SK Hynix in the market for high-bandwidth memory chips – a crucial component in the data centre processors powering the artificial intelligence boom. Demand for the components has skyrocketed due to AI data centre needs, and the three companies have warned in recent months of limited supply.

In response to a request for comment, a Commerce Department spokesperson said, “Secretary Lutnick is committed to restoring American manufacturing dominance and that starts with semiconductors.” Spokespeople for Samsung, SK Hynix and the Taiwanese representative’s office in Washington did not immediately respond to requests for comment.

The Taiwan trade deal unveiled on Thursday allows Taiwanese companies building new US operations to import 2.5 times their current capacity tariff-free during construction, with a lower rate applied to shipments above that quota. That cap would fall to 1.5 times current capacity once production facilities are complete.

As part of the agreement, which sets tariffs on goods from the self-governed island at 15 per cent, Taiwan’s tech industry would commit to at least US$250 billion in direct investments in the US. Taiwan Semiconductor Manufacturing Co would build at least four more chipmaking plants in the US – on top of six already planned – requiring roughly an additional US$100 billion of capital, according to people familiar with the matter.

Under an accord with South Korea announced in July, the US would charge a tariff of 15 per cent on most goods from the country, while sparing for now imports of chips. The agreement between Washington and Seoul includes a US$350 billion South Korean fund for US investments, yet those plans are still taking shape and it’s unclear how much more Samsung and SK Hynix will agree to spend in the US beyond their earlier commitments.

Samsung unveiled plans in 2024 to invest more than US$40 billion in the US, including US$17 billion for an advanced packaging facility in Texas for high-bandwidth memory chips. SK Hynix, meanwhile, has said it intends to spend nearly US$4 billion on advanced packaging in Indiana, part of US$15 billion for production and research in the US.

Micron promised last year to invest as much as US$200 billion in the US, including US$150 billion for domestic manufacturing and another US$50 billion for research and development. Announced more than three years ago, the facility in Clay, New York, represents the biggest US investment for the Boise, Idaho-based company, which currently makes most of its chips at facilities in Asia.

In addition to Lutnick, the groundbreaking was attended by Micron chief executive officer Sanjay Mehrotra, New York governor Kathy Hochul and US Senate Democratic Leader Chuck Schumer, who braved bitter winter temperatures for the event. The complex represents the largest private investment in New York state history, and Micron says it would eventually feature four chip fabrication plants and generate 50,000 new jobs.