PiCK

Summary

  • The US midterm-election “blue wave” has raised the possibility of changes to subsidies and tax credits for Samsung Electronics and SK Hynix, as well as delays in disbursement.
  • There is also a view that the chances of major damage to AI chip demand and the long-term supply agreements (LTAs) of Samsung Electronics and SK Hynix are low because of efforts to contain China.
  • Expectations are rising for stronger demand tied to the Democrats’ push to expand clean-energy investment, including in batteries and solar power, ESS, and backup batteries for servers.

Forecast Trend Report by Period

How a Democratic Sweep in the US Could Affect Korean Industry

Subsidies for Samsung and SK Hynix’s US Plants

Payment Procedures Could Lengthen or Be Delayed

No Immediate Hit to Chip Demand Seen

Battery, Solar Sectors Hope for Green Revival

South Korean semiconductor companies are closely watching the fallout from a Democratic “blue wave” that gave the party control of both chambers in the US midterm elections. Samsung Electronics Co. and SK Hynix Inc., which operate plants in the US or are expanding capacity there, could be directly affected by changes to subsidy and tax-credit policies. At the same time, some in and around the chip industry say concerns over a sharp slowdown in artificial-intelligence investment are overstated. Containing China’s push in AI remains a bipartisan priority in the US, leading to expectations that AI investment is unlikely to fall off significantly. In the electric-vehicle, battery and solar industries, hopes are also rising that clean-energy investment will regain momentum.

Subsidy Procedures a Variable as Long-Term AI Demand Holds Up

Industry officials said on Nov. 8 that subsidies are likely to be the first area of impact for Samsung Electronics and SK Hynix after the US midterm elections. Samsung’s foundry plant in Taylor, Texas, is set to receive phased subsidies of as much as $4.745 billion from the federal government and as much as $250 million from the state of Texas under the US CHIPS Act. SK Hynix’s fab in Indiana, where construction began in August, is eligible for subsidies of up to $458 million.

There is also the possibility that subsidy disbursement procedures could expand or be delayed as additional steps, including certification of compliance with environmental regulations, are added. KOTRA, the Korea Trade-Investment Promotion Agency, said in a recent report titled “The 2026 US Midterm Election Results and Implications” that a Democratic Congress would likely tighten oversight of the implementation of existing agreements, the execution of subsidies and the management of funding for research-and-development projects.

Despite concerns over regulation in the US, many in the industry do not expect demand for AI semiconductors to weaken sharply anytime soon. Lee Jong-hwan, a professor in the Department of System Semiconductor Engineering at Sangmyung University, said construction of AI data centers could face a temporary slowdown. But the US cannot afford to retreat from AI investment if it feels threatened by China, he added. While some long-term supply agreements signed by Samsung Electronics and SK Hynix could be affected, he said a major hit remains unlikely.

New data-center investment is expected to become more selective. Democrats have signaled they would charge companies for AI infrastructure costs, including electricity and water. Industry officials also say companies could be pressed to present job-creation measures, given that data centers generate less employment than other large-scale facilities such as factories. If costs rise, lower-margin data-center projects could lose momentum.

Big Tech is already moving to respond. Meta Platforms Inc. is considering expanding existing data centers to avoid complex permitting procedures. Setting up data-center hubs outside the US, including in Asia, is also being discussed. The Wall Street Journal reported that OpenAI Chief Executive Officer Sam Altman told employees after the midterm elections that building data centers in the desert could also be an option.

MASGA Policy Seen Staying in Place

The impact of the blue wave on South Korea’s auto industry is likely to be limited. The 15% tariff imposed on Korean-made vehicles is based on Section 232 of the US Trade Expansion Act. That falls under the executive branch, not Congress.

Instead, a more favorable environment may emerge for electric-vehicle adoption. Democrats are pushing to restore the EV purchase tax credit that expired in September last year. The key variable is whether President Donald Trump exercises his veto power.

Because Democrats are supportive of green industries, the battery and solar sectors have also gained some relief. Republican efforts to move quickly to scale back tax credits for battery production in the US and support for energy storage system, or ESS, investment appear likely to face resistance. Delays in data-center permitting remain a burden, but there are also expectations that Big Tech will increase ESS installations and backup batteries for servers to store electricity against power shortages and blackouts.

The basic direction of MASGA, a South Korea-US shipbuilding cooperation project, is also seen remaining in place. Rebuilding the US shipbuilding industry and strengthening defense capabilities are bipartisan goals.

Roh Yoo-jung and Yang Gil-seong, Hankyung reporters [email protected]

Korea Economic Daily