Has the first investment project in the US changed? Rumor has it that the US is pressuring Samsung and SK Hynix to build a memory factory in the US, South Korea urgently denies but refuses to disclose details

The Zhitong Finance App learned that South Korea's presidential office Cheongwadae recently denied a local media report that the government is discussing the semiconductor project with the US as the first investment project under the $350 billion investment promise to the US. Cheongwadae said in an SMS statement that reports that the two countries are discussing semiconductors as the first strategic investment project are “untrue,” but declined to further explain the details of negotiations between South Korea and the US over investment commitments.

According to information, an earlier report quoted an unnamed ruling party official as saying that the US side has requested South Korea to prioritize investment in US memory chip production facilities, causing Seoul's first investment project to be announced in the US at the end of this month.

The report said that the US demand was the core topic of the August 13th Cheongwadae closed-door trade meeting. Until now, South Korea has always given priority to the energy sector as the first major investment project in the US, but the US suddenly changed priorities and put forward additional requirements, which changed the negotiation pattern.

Most of the participating officials believed that it was unrealistic to invest in memory chip production facilities in the US. The main reason is that Samsung Electronics (SSNLF.US) and SK Hynix (SKHY.US) have announced that they will invest about 800 trillion won (about 580 billion US dollars) to build chips and data centers in the southern Hunan region of South Korea. Additional large-scale memory investment in the US may diversify corporate investment capacity and affect the construction of the semiconductor industry cluster and ecosystem in South Korea. A source said, “Memory is a strategic industry in Korea and must be considered in conjunction with domestic clusters and semiconductor ecosystems.”

The timing for the US side to officially put forward this request is also quite delicate. The South Korean government just announced huge investment plans for Samsung Electronics and SK Hynix in the Hunan region at the end of June. US Secretary of Commerce Howard Lutnick publicly named the two companies on July 9, saying he wanted to “bring them to the US to build production facilities.” Kim Yong-beom, director of the policy office at Cheongwadae, later responded on social media, saying, “Expanding production at the Korean fab is a national project.” Since then, the memory issue has moved from open confrontation to behind-the-scenes negotiations.

In this context, South Korea's Minister of Industry and Trade Kim Jong-kwan made an emergency trip to the US on the 16th, only three weeks since his last visit to the US. Kim Jong-kwan said in Washington that South Korea still hopes to announce investment projects from the end of August to the beginning of September, but after entering the final stage of negotiations, a number of specific practical issues have arisen. Some analysts in the diplomatic community believe that this shows that the two sides still have differences in project selection, investment scale, and conditions.

What worries South Korea even more is that delays in investment announcements are once again triggering pressure on US tariffs. Sources said that the US has once again mentioned the possibility of resuming higher tariffs on South Korean cars and other goods. In January of this year, then-President Trump threatened to restore South Korea's automobile tariffs from 15% to 25% on the grounds of slow processing of the Special Investment Law in the US. The pressure was suspended after the March bill was passed. Now that the No. 1 project has been delayed, the dissatisfaction of the US side is once again heating up.

Pressure is also showing signs of spilling over into the field of security cooperation. Follow-up negotiations on the introduction of nuclear-powered submarines between South Korea and the US and the revision of the nuclear agreement have been difficult since the first meeting in Seoul in June, and the second meeting, which was originally scheduled to be held in Washington in July, is still difficult. Senior members of the ruling party are worried that “trade issues are eroding security negotiations.” If the US threatens security cooperation, the situation may become more complicated.

Analysts believe that South Korea is currently facing a dilemma: on the one hand, it needs to announce its first investment project in the US as soon as possible to show sincerity and ease the overall relationship; on the other hand, the US continues to add additional requirements, causing commercial rationality reviews and domestic industrial protection pressure to simultaneously increase. If not handled properly, not only may investment negotiations with the US fall into a tug-of-war, but economic, trade and security cooperation between South Korea and the US may also be affected in collateral ways.