Taiwan distances itself from South Korea on US chip tariffs as Washington weighs delay

A split message from Taipei and Seoul

Taiwan has moved to distance itself from talk of partnering with South Korea on the United States plan to tax imported semiconductors. Premier Cho Jung tai told lawmakers that he had no information on any cooperation with Seoul and said Taiwan is speaking directly with Washington on tariff issues. His remarks came after South Korea’s trade minister said there was room to coordinate with Taiwan on the proposed chip tariffs. The different tones underline how two of the most important chip making economies are managing the same risk in different ways while the White House considers when and how to proceed.

For now, Taipei says its trade team is in one on one talks with US counterparts. Taiwan’s exports to the United States currently face a 20 percent tariff, which officials are trying to reduce. That rate does not cover semiconductors at present. Seoul has signaled that shared interests with Taipei could support coordination as it seeks to shield its chip sector in any new tariff regime. At the same time, US officials have told partners privately that the long promised semiconductor tariffs might not arrive soon, a possible delay that could change the timeline of President Donald Trump’s economic program and give the industry more time to prepare.

What the new US tariff regime looks like

Since early August, Washington has applied broad tariffs on goods from more than 90 countries. The administration has framed the measures as a way to bring manufacturing back to the United States and to push partners to strike new trade arrangements. Rates vary by country. The European Union accepted a 15 percent tariff on its goods. Taiwan faces a 20 percent rate on most exports. Several export led economies in Southeast Asia face higher bands. Some countries reached deals that set lower rates than originally threatened, and some tariffs were paused and then adjusted as negotiations moved forward. Markets in Asia absorbed the changes after months of uncertainty, but trade ministries still see risk ahead as industry specific measures roll out.

Semiconductors sit at the center of the debate. The White House has threatened a tariff as high as 100 percent on foreign made chips, with the stated goal of speeding investment in US based fabrication. Government officials in Taipei and Seoul have said in separate statements that large chip makers with major US commitments could be exempt. That list includes Taiwan Semiconductor Manufacturing Co, Samsung Electronics, and SK Hynix. The administration has not released a final rule and has not detailed how exemptions would be granted or maintained. Taipei stresses that chips are currently outside the 20 percent tariff that applies to most other Taiwanese exports, even as it negotiates to lower that rate.

Why chips matter and how the supply chain works

Semiconductors are the tiny processors and memory units that power phones, laptops, cars, data centers, and artificial intelligence servers. They are made in complex factories that cost tens of billions of dollars to build and run. Every fabrication step demands specialized equipment and spotless conditions. Any disruption can ripple through many industries.

Taiwan is home to TSMC, the largest contract chip manufacturer. It makes logic chips designed by clients like major smartphone and AI chip developers. TSMC leads in advanced process technology, where many transistors are packed into a very small area. South Korea is strong in both logic and memory. Samsung is a leading supplier of memory chips and also offers contract manufacturing for logic chips. SK Hynix is a top producer of memory chips used in servers, graphics cards, and phones. Logic chips are the brains that run software, while memory chips store and retrieve data. The global electronics boom and the race to build AI infrastructure have lifted demand for both. That is why any tariff on chips can touch a wide range of products and companies.

What each capital wants from Washington

Taipei and Seoul share one priority, predictable access to the US market for their most valuable goods. They are pursuing that goal in different ways based on their economies, past deals with Washington, and domestic politics.

Taiwan’s negotiating posture

Premier Cho said trade negotiators are working one on one with the United States. Taipei aims to cut the current 20 percent tariff on most non semiconductor exports while keeping chips outside the scope of any new levy. Taiwan’s leadership has also described competition with South Korea in high tech sectors as relatively benign. The message is that the two economies can compete on performance and still avoid open friction as they each try to safeguard their strengths. Taiwan’s president has called the 20 percent rate temporary and said talks with the United States are ongoing, a signal that Taipei expects movement as discussions continue.

South Korea’s calculus

Seoul’s trade minister has said there is room for cooperation with Taiwan on the chip tariff question. South Korea recently struck arrangements with Washington that reduce some tariffs in exchange for large investments in US strategic industries. As part of those understandings, US officials pledged that any semiconductor tariffs on South Korean goods would be no less favorable than terms offered to others in future deals. That language appears designed to prevent South Korea from being disadvantaged if Taiwan or another major supplier secures special treatment. Seoul sees common ground with Taipei because both economies sell advanced chips into the United States and both are increasing US based production to meet government priorities and customer demand.

Competition without confrontation between Taiwan and South Korea

The two economies often compete for the same contracts, yet their strengths are different. Taiwan dominates contract manufacturing for cutting edge logic chips. South Korea dominates memory chips and has a presence in contract logic manufacturing. Recent trade data show how national strategies and tariff exposure can shift outcomes. Taiwan’s exports set records in mid year as AI spending lifted orders for logic chips and advanced components. One report said Taiwan’s exports rose more than 30 percent year over year in August to roughly 58 billion dollars, with shipments to the United States surging by more than 60 percent. Semiconductor exports climbed at an even faster pace during that period.

South Korea’s performance looked more mixed over the same period as renewed US tariffs hit categories like steel and some auto parts. Korea’s exports to the United States fell in August compared with a year earlier, even as chip shipments for AI uses remained firm. The gap highlights how tariff exposure outside semiconductors can affect headline results. It also shows why both capitals are pressing Washington for clarity on chips. If logic and memory exports remain exempt or receive carve outs based on new US investments, both economies can lean on their strengths while ramping up US production in Arizona, Texas, and other hubs. If a broad tariff lands without clear exemptions, many global electronics producers would face higher costs.

Could semiconductor tariffs be delayed or reshaped

People familiar with the talks say US officials are considering a delay to the long discussed chip tariffs. Several factors point that way. The United States relies on leading edge chips for defense and critical infrastructure. Many of those chips now come from overseas. The administration also has to weigh inflation risk from higher import costs, legal steps required to finalize such a sweeping move, and concerns from allies who have invested heavily in US plants after the last two years of policy signals. A delay would not end the debate. It would buy time for more targeted measures.

Policy options under review include narrow tariffs that exclude top investors in US facilities, time limited waivers tied to production milestones inside the United States, or country specific agreements that codify cooperative safeguards for sensitive technologies. Washington could also choose licensing rules, quotas, or national security reviews for certain chip categories instead of a blanket tariff. Each path would affect product lines differently. High performance logic for AI servers, graphics memory for data centers, and chips used in autos and industrial gear would not face the same treatment if policy becomes more tailored.

What it means for consumers and markets

Tariffs are taxes paid by US importers. Some or all of those costs can be passed on to buyers. If a broad chip tariff took effect without generous exemptions, prices could rise for electronics that use a large number of imported chips. That includes laptops, smartphones, servers, networking gear, and many connected devices. The net effect would depend on how much room companies have to absorb costs, what inventory is already on hand, and whether product cycles can shift to sources that clear US rules. If major suppliers retain exemptions based on US investments and security assurances, price effects could be modest in the near term. Smaller chip makers with little US presence could face higher costs and lose share.

Investors are watching two counters. First, the share of chip capacity that moves to US soil over the next two to three years. Second, the wording of any final tariff rule, especially how it defines exemptions and how long they last. TSMC, Samsung, and SK Hynix have announced large US projects to support advanced logic and memory. Those plants do not come online overnight. The build out will take time and money, which is why both Taipei and Seoul want predictable policy that allows them to plan capital spending and pricing. The broader tech sector is also shifting production footprints. Companies in servers, smartphones, and autos are qualifying more suppliers and packaging partners in locations that face fewer trade barriers. The push for supply chain resilience is likely to continue regardless of the tariff timeline.

Highlights

• Taiwan’s premier said there is no information on cooperation with South Korea over US chip tariffs and that Taipei is negotiating directly with Washington.
• South Korea’s trade minister said there is room for cooperation with Taiwan as both seek to protect their chip sectors.
• US officials have indicated the long discussed semiconductor tariffs may be delayed, leaving the timeline uncertain.
• Taiwan faces a 20 percent tariff on most exports to the United States, but chips are not covered at present.
• The White House has threatened a 100 percent tariff on foreign made chips, with officials in Taipei and Seoul saying TSMC, Samsung, and SK Hynix could be exempt.
• Taiwan leads in contract manufacturing of advanced logic chips, while South Korea dominates memory and also offers logic foundry services.
• Trade data this year show Taiwan’s exports surging on AI demand, while some South Korean exports to the US have been hit by non chip tariffs.
• Possible US policy paths include narrow tariffs with waivers, country specific agreements, or alternative tools like licensing and quotas.