Trump’s potential subsidy review sparks concern for Korean chipmakers

U.S. President-elect Donald Trump’s newly announced Department of Government Efficiency (DOGE) may review the Joe Biden administration’s subsidies for chipmaking and clean energy. If this review leads to policy changes, South Korean semiconductor companies, which expect to receive 9.5 trillion won in subsidies for building a plant in the United States, could face significant setbacks.

Vivek Ramaswamy, who will co-lead the Department of Government Efficiency alongside Tesla CEO Elon Musk, criticized recent comments by Gina Raimondo, the current Secretary of Commerce. Ramaswamy labeled Raimondo’s statement—promising subsidies to both domestic and foreign companies until the end of the Biden administration—“highly inappropriate.” He further announced that the new department would review all last-minute contracts and recommend that inspectors thoroughly scrutinize spending.

This development has heightened uncertainty around subsidies promised to South Korean chipmakers Samsung Electronics and SK hynix, amounting to $6.4 billion and $450 million, respectively. While the U.S. Department of Commerce recently finalized $7.86 billion in subsidies for Intel, negotiations for South Korean companies remain ongoing. If these negotiations are delayed until Trump’s inauguration in January 2025, the promised funds may be at risk.

Although the Office of Government Efficiency is not an official government department, it is expected to wield considerable influence in the Trump administration, particularly in efforts to reduce bureaucracy, regulations, and government expenditures. Trump’s past comments provide further cause for concern. During his presidential campaign last month, Trump said he would impose high tariffs to get them to set up shop in the U.S. for free. Against this backdrop, Ramaswamy’s remarks cannot be ignored.

For South Korean companies and their government, swift action is crucial. Collaborating with U.S. state and municipal governments in areas where factories are being built could help expedite the release of subsidies. Additionally, adjusting the pace of investments may provide a safeguard against potential losses. Most importantly, South Korea must convince the Trump administration of these companies' mutual benefits to the U.S. economy—creating jobs, driving innovation, and contributing to economic growth—which will not materialize if corresponding incentives are not extended. Joint efforts with other countries and businesses facing similar challenges could also bolster South Korea’s case.