Rising U.S. costs challenge South Korea's memory firms

From the start of the year, South Korean semiconductor companies have faced mounting concern over the United States’ aggressive push to attract memory chip investment. Memory production depends heavily on cost efficiency, and relocating manufacturing to the U.S. could lead to substantial losses. Even Micron Technology, a U.S.-based memory chipmaker, has historically located its main production facilities in Taiwan and Japan.

According to the semiconductor industry on Jan. 19, companies such as Samsung Electronics and SK hynix estimate that operating memory plants in the U.S. would result in costs at least double those incurred in Asia. Global consulting firm McKinsey said last year that building a semiconductor fabrication plant in the U.S. entails labor costs four to five times higher than in Asia, while ongoing labor expenses are two to four times higher. The estimates also reflect higher costs for materials and components, as well as the risk of reduced productivity.

For this reason, Samsung Electronics, SK hynix and Micron have kept their core manufacturing bases in South Korea, China, Japan, Taiwan and Singapore. Samsung Electronics and SK hynix, the world’s two largest memory producers, manufacture their most advanced chips in South Korea while producing some older-generation chips in China. Micron, the third-largest player, has for decades operated major production facilities in Japan and Taiwan to remain competitive with its South Korean rivals. Its U.S. plant in Virginia, established in 1981, is dedicated primarily to older-generation chips and accounts for less than 10% of the company’s total output.

Within the semiconductor industry, criticism followed U.S. Commerce Secretary Howard Lutnick’s Jan. 16 remarks that “memory producers must either pay 100% tariffs or manufacture their products in the U.S.” Industry insiders said the comments reflected a fundamental misunderstanding of the memory chip business, where cost efficiency and large-scale production are critical to competitiveness.

The concern stems from the timing and setting of Lutnick’s remarks, which were delivered at the groundbreaking ceremony for Micron’s New York “megafab,” a move widely seen as signaling the company’s partial return to U.S. production. Micron also announced plans to manufacture about 40% of its DRAM in the United States by around 2040. The announcement underscored Washington’s determination to advance a “Made in America chip” initiative, even if doing so requires chipmakers to absorb significantly higher costs.

Park Jae-geun, a professor in Hanyang University’s Department of Convergence Electronics Engineering, said the current tightness in the memory market should not be assumed to last. “Memory chips are in short supply now, but market conditions can change within three to four years,” he said. “Unlike TSMC’s contract-based foundry model, producing memory chips in the United States entails substantial risks. Companies must approach these decisions with great caution.”


박현익 기자 beepark@donga.com