By: Zhao Ying
The United States' demands on South Korea's semiconductor industry are escalating from "building factories" to "sharing the profits."
According to a report on Friday by The Korea Times citing informed sources, U.S. Deputy Trade Representative Rick Switzer explicitly stated during a meeting last month with South Korea's Minister for Trade Ahn Duk-geun that the U.S. side has the right to share in the massive profits of SK Hynix and Samsung Electronics, arguing that large-scale procurement by American companies has directly driven the profit growth of Korean chip firms. This statement has not yet been officially confirmed by the U.S. side, but it has already sparked widespread attention within South Korea's industry and government circles.
The backdrop to this development is South Korea's semiconductor exports to the United States surging over 90% year-on-year in the first half of this year, with Korean memory companies continuing to capture substantial profits within the global AI industry chain.
A CITIC Securities research report points out that, based on historical experience, when foreign enterprises persistently achieve high market share or high profits in important industries, it often triggers political intervention by the U.S. government, accelerating a redistribution of global industrial interests – the experiences of Japan's semiconductor industry in the 1980s and Taiwan's panel industry in the 2000s serve as cautionary tales.
U.S. Logic: Procurement Contributes to Profits, Therefore Should Share in Earnings
According to an industry source familiar with the situation cited by The Korea Times, Rick Switzer told Ahn Duk-geun during the meeting that large-scale procurement of Korean semiconductors by U.S. companies has directly contributed to the profit growth of Korean chipmakers, thus the U.S. side should also have the right to share in those profits.
"The U.S. logic is that if Korean domestic partners have the right to receive a share for contributing to part of the profits, then American companies should enjoy the same right," the source said. A senior South Korean government official also confirmed to The Korea Times that the U.S. side indeed raised this claim, but offered no further explanation.
The Korea Times reached out multiple times to the Office of the U.S. Trade Representative, as well as the Departments of Commerce and Treasury for comment, but received no response. An official from South Korea's Ministry of Trade, Industry and Energy stated they were unaware of the matter and reiterated Korea's basic stance that "industrial matters should be advanced based on principles of commercial rationality."
Historical Parallels: High Profits Often Spark Political Intervention
The CITIC Securities report outlines two typical cases that reveal the U.S. government's operational logic in similar situations.
- Japanese Semiconductors (1980s): Following the rapid rise of Japan's semiconductor industry and its persistent erosion of the competitive advantage of U.S. firms, the U.S. government, driven by industry and trade associations, exerted pressure on Japan through tariffs, Section 301 investigations, the U.S.-Japan Semiconductor Agreement, and 100% punitive tariffs. This policy shock, combined with the bursting of Japan's economic bubble, ultimately led to a redistribution of global semiconductor market share and profits. Notably, the market share lost by Japan did not return to the U.S.; instead, South Korea became the eventual beneficiary thanks to policy support.
- Taiwan Panels (2000s): In 2006, Taiwan's share of large-size LCD panel shipments once ranked first globally. That same year, the U.S. Department of Justice launched an antitrust investigation on price-fixing charges. Major Taiwanese panel companies incurred cumulative criminal fines exceeding $800 million, with several executives sentenced to prison. The policy shock, coupled with the financial crisis and industry downturn, ultimately drove the transfer of global panel market share and profits to mainland China.
CITIC Securities notes that these two cases share a common pattern: once the high profits of foreign enterprises are reframed by the U.S. government as harming the competitiveness of its domestic industry, political intervention follows, often employing a combination of trade, industrial, or antitrust tools.
Current Situation: Supply Takes Priority, Political Pressure Not Yet Formed
CITIC Securities believes that understanding whether the high profits of Korean memory companies will trigger U.S. government intervention hinges on comprehending the decision-making mechanisms of its technology and economic policies.
At this stage, relevant U.S. policies are still dominated by the core White House teams of Trump and Bessent, while the rising influence of tech right-wing figures like Michael Kratsios and David Sacks is also increasing the impact of U.S. tech giants on the policy agenda. After an issue is framed by the White House core circle, execution typically falls to agencies like the Commerce Department, USTR, Department of Justice, and FTC, utilizing trade, industrial, or antitrust tools respectively.
For the current phase, against the backdrop of still robust AI demand, the U.S. business community is more focused on securing memory supply than on suppressing the prices and profits of Korean companies. The political establishment tends to integrate MAGA with tech industrial policy, aiming to promote the expansion of Korean companies' production in the U.S. to drive the return of manufacturing, jobs, and supply chains. Although sporadic opposition voices have emerged in U.S. political circles, industry groups, and among consumers regarding Korean memory price hikes, systemic political pressure has not yet formed.
Risk Threshold: Cost-Passing Ability is the Key Variable
CITIC Securities cautions that as long as memory costs can still be passed downstream, price increases are more likely to be viewed as part of the spread of AI prosperity, and motivation for political intervention remains relatively limited. However, if prices continue to rise significantly and noticeably squeeze the profits and investment returns of U.S. companies, the high profits of Korean memory makers might be redefined by the U.S. government as harming U.S. AI competitiveness.
The report advises closely watching for two signals: First, whether U.S. tech giants shift from securing supply to publicly opposing price hikes. Second, whether the policy decision-making level shifts from ensuring supply and promoting expansion in the U.S. to intervening on grounds such as "monopoly," "price-fixing," or "supply chain security."
Rick Switzer's above statement may be an early signal of this risk transitioning from potential to visible. For SK Hynix and Samsung Electronics, the frontline of U.S.-South Korea semiconductor competition has quietly extended from manufacturing localization to the realm of profit distribution.
