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US Commerce Secretary Howard Lutnick speaks before Congress in June. (Reuters/Yonhap)

The Trump administration has announced that it is considering demanding equity from semiconductor firms in return for providing subsidies to build factories on US soil.  Such demands will be made not only of American firms like Intel but foreign companies like Samsung Electronics and TSMC. 

It’s a flabbergasting idea that’s hard to comprehend, one that goes against the principles of the market economy based on trust — from the US, the world’s leading capitalist nation, no less. The notion merits no further discussion. 

During an interview with CNBC on Aug. 20, US Secretary of Commerce Howard Lutnick said, “The CHIPS Act was just a giveaway to rich companies. Why in the world is the United States of America taking money and giving it to companies like TSMC, which is worth US$1 trillion?”

“The answer Donald Trump has is: We should get an equity stake for our money,” Lutnick said earlier in the interview. 

If this becomes a reality, Samsung Electronics, which was awarded grants worth US$4.745 billion, will have to forfeit an equity stake of 1.56% to the US government. This would be a massive claim, one that would rival that of the company’s chairperson, Lee Jae-yong (1.65%). 

To reconstruct its domestic semiconductor industry and to secure its national security, the US has all but forced Korean companies to invest in the US. Now it’s making a preposterous request for a pound of flesh.

While Korean firms do receive immense subsidies, they still have considerable opportunity costs to bear. Korean firms are barred from building new chip facilities in China for 10 years. As investment resources are limited, the increased cost of building in the US would reduce investment in South Korea, which would negatively impact domestic employment. 

But Lutnick speaks as if Korean firms are just getting handouts with no conditions. The US is the world’s preeminent superpower, but this crosses the line. 

The South Korean government needs to respond forcefully. The Trump administration is demanding astronomical investments from our country. If he suddenly changes the stakes, then how can we operate in good faith going forward? 

Addressing this new revelation, presidential office spokesperson Kang Yu-jung said it was “baseless.” 

But her demeanor was too glib and passive. The problem won’t solve itself if we just close our eyes and ignore it. Lutnick, the commerce secretary and a close ally of Trump, made his comments on a public broadcast. 

Amid its rivalry with China, the US is fighting tooth and nail to maintain and expand its hold over the global chip industry. 

The objective is to reduce American dependence on firms in South Korea and Taiwan by fostering industrial capacity on the home front. If the US secures an equity stake, there is the possibility that it will demand sensitive technology. South Korea needs to open its eyes to the severity of the issue and put its foot down.

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