U.S. requires 55 percent of components to be manufactured locally

The “America First” policy based on Washington’s pursuit of nationalism has put growing pressure on South Korean businesses. Since a U.S. government official remarked that the policy might limit Korean semiconductors from being manufactured in China, uncertainties have been growing across the semiconductor industry. With detailed guidelines of the Inflation Reduction Act to be released one month later, a set of regulations centered on chargers have come along. Semiconductor businesses assessed that the United States wields influence over the sectors of semiconductors and batteries, which serve as South Korea’s core growth engines.

The Build America Buy America Act's provisions, released on Feb. 15 (local time) by the Biden administration, drove South Korean businesses into a state of confusion, according to industry insiders on Sunday. As per the law passed by the U.S. Congress in 2021, the U.S. government aims to build a network of 500,000 electric vehicle chargers across the nation with a 10-trillion-won investment plan. However, it requires that subsidies on chargers are to be provided only when U.S. steel components are used for manufacturing processes and final products are assembled within the United States. Starting July next year, more than 55 percent of components must be manufactured in the United States. Indeed, it is reminiscent of an IRA for chargers.

South Korean manufacturers have been taken aback. Part of their original plan was exporting components to U.S. partners, but they may have to seek another option and consider building factory lines on U.S. territory. Some businesses have prepared to make products locally in the United States. However, they are left nervous about an uncertain supply of U.S. materials. “U.S. materials do not ensure high quality," said an executive of a charger manufacturer. "If we have to find local suppliers hastily, we will end up signing a contract, likely at a higher price compared to local competitors."


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