Manufacturing semiconductors in the U.S. costs much more than in South Korea, according to two of the sources. Building in the United States entails significantly higher labour and construction costs, and much of the semiconductor industry's supply chain is located within Asia, which also increases U.S. costs, one of them said.
Even so, SK Hynix, which recently completed a secondary listing on the Nasdaq in July and currently only has a chip packaging facility under construction in Indiana, has good reasons to pursue fabricating chips in the United States.
Chey Tae-won, chairman of the SK Group conglomerate that SK Hynix is part of, said in July that the company faces enormous pressure and lobbying from customers and countries to supply more chips.
"I think we need to build a factory in the United States. If possible, I believe we should build it," he told reporters.
A deal with SK Hynix would also ease some of the financial strain on Intel, which is part-owned by the U.S. government.
Intel announced in 2022 that it would invest up to $100 billion to build potentially the world's largest chipmaking complex in Ohio, with production scheduled to begin in 2025. But completion of the site's two plants has since been delayed to 2030 and 2031.
Pleasing both Washington and Seoul could be tough, however, particularly as SK Hynix and rival Samsung Electronics have been urged by the Seoul to accelerate plans to build a new cluster of chipmaking facilities in South Korea's southwest.
U.S. Commerce Secretary Howard Lutnick has threatened to impose up to 100% tariffs on South Korean and Taiwanese companies unless they commit to increased production on American soil.
Both countries have also been wrangling over the execution of a huge investment commitment that South Korea made to the U.S. last year in return for lower U.S. tariffs. Some $150 billion of a proposed $350 billion has been earmarked for shipbuilding but the remaining $200 billion is undecided.
Two of the sources said this has left SK Hynix in a difficult position, with the South Korean government seeking to use any U.S. investment by SK Hynix as leverage in the talks, and Washington heaping pressure on the firm to quickly commit to a U.S. expansion.
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