South Korea Excludes Chip Fabs from $200 Billion U.S. Investment Framework
Seoul clarifies that state-of-the-art semiconductor plants will not be subject to a U.S.-led profit-sharing model that would cede majority control to Washington.
The South Korean government and industry leaders have clarified that semiconductor fabrication plants (fabs) are excluded from a $200 billion U.S. investment framework. The move establishes a firm boundary on how much operational control Seoul is willing to cede to the United States amid intensifying pressure to shift chip production to American soil.
The $200 billion investment is governed by the Korea-U.S. Strategic Investment MOU. Under this agreement, projects are selected by U.S. President Donald Trump following recommendations from a committee chaired by Commerce Secretary Howard Lutnick. The framework utilizes a U.S.-established Special Purpose Vehicle (SPV) that owns and operates the projects, while Korea provides the necessary funding and recovers the principal and dividends.
The Profit-Sharing Conflict
The exclusion of fabs stems from the MOU's aggressive profit-sharing structure. The terms dictate a 50-50 split until the principal is recovered; however, once that threshold is met, the U.S. takes 90% of the profits, leaving only 10% for Korea. Because of these terms, semiconductor-related investments within this specific framework are strictly limited to infrastructure, packaging, equipment, components, and materials. State-of-the-art memory fabs are explicitly omitted from the SPV model.
Strategic Context
This clarification arrives as the U.S. continues to push allies to secure supply chains by domesticating high-tech manufacturing. South Korea has already made massive commitments to this goal, including SK Hynix’s HBM Packaging & R&D Facility in Indiana and Samsung Electronics’ Taylor Foundry in Texas. Chang Sang-sik, head of the Korea Trade Association’s Institute for International Trade, stated that these existing trillion-dollar investments should be recognized as significant contributions to the U.S. core supply chain.
Industry Implications
For South Korea, the distinction is a matter of national economic security. Applying the SPV structure to fabs would effectively strip Korean firms of control over their most sensitive intellectual property and the vast majority of their long-term earnings. By isolating fabs from the MOU, Seoul ensures that its most critical microprocess technology, yield expertise, and customer data remain under Korean ownership rather than becoming subordinate to a U.S.-led entity.
Future Outlook
While the boundary for the $200 billion project is now clear, the tension between U.S. domestic production goals and Korean corporate autonomy remains. Observers will be watching to see if the U.S. administration accepts this carve-out or seeks new incentives to bring the most advanced fabrication technology under American jurisdiction. For now, the MOU serves as a vehicle for supporting industries, but not for the crown jewels of Korea's semiconductor empire.