Stored "New Ghost Stories": Is the US going to rob money?

The United States' demands on the South Korean semiconductor industry are transitioning from "building factories" to "sharing profits". According to the South Korean Times, last month, the Deputy Representative of the United States Trade Representative's Office, Rick Switzer, made it clear in a meeting with South Korea's Minister of Trade, Industry, and Energy, Loh Khang-kiu, that the U.S. has the right to share the huge profits of SK Hynix and Samsung Electronics, as U.S. companies' extensive purchases directly drove the profit growth of South Korean chip companies. This statement has not yet been officially confirmed by the U.S., but it has sparked widespread attention in South Korea's industry and government. This trend comes as South Korea's semiconductor exports to the U.S. surged by over 90% in the first half of this year, and South Korean storage companies continue to dominate high profits in the global AI industry chain. CITIC SEC's research report points out that based on historical experience, when overseas companies consistently gain high market share or profits in important industries, it often triggers U.S. government political intervention to accelerate the redistribution of global industry interests as seen in the cases of Japan's semiconductor industry in the 1980s and China's Taiwan's panel industry in the 2000s. U.S. logic: Purchases contribute to profits, therefore should share in the benefits According to a source familiar with the situation quoted by the South Korean Times, Rick Switzer raised in the meeting with Loh Khang-kiu that U.S. companies making extensive purchases of South Korean semiconductors directly drove the profit growth of South Korean chip companies, and therefore the U.S. equally has the right to share in these profits. "The U.S. logic is that if South Korean local partners have the right to a share of the profits for contributing, then U.S. companies should also have the same rights," the source said. A senior South Korean government official also confirmed to the South Korean Times that the U.S. did make the above assertion, but did not provide further clarification. The South Korean Times attempted to contact the U.S. Trade Representative's Office, Commerce Department, and Treasury Department for comment, but did not receive a response. An official from South Korea's Ministry of Trade, Industry and Energy stated that they were not aware of the matter, and reiterated South Korea's basic stance that "industry-related matters should be based on principles of commercial rationality". Lessons from history: High profits often lead to political intervention CITIC SEC's research report highlights two typical cases, revealing the U.S. government's actions in similar situations. Japanese semiconductors (1980s): As Japan's semiconductor industry rapidly rose and continued to squeeze U.S. companies' competitive advantage, the U.S. government, with the support of the business community and industry associations, used measures such as tariffs, Section 301 investigations, the U.S.-Japan Semiconductor Agreement, and 100% punitive tariffs to pressure Japan. These policy shocks, combined with the collapse of the Japanese bubble economy, ultimately led to a redistribution of global semiconductor industry market share and profits. It is worth noting that the market share lost by Japan did not return to the U.S., but rather South Korea became the ultimate beneficiary with policy support. China's Taiwan panel industry (2000s): In 2006, Taiwan's large-size LCD panel shipments briefly ranked first globally. That same year, the U.S. Department of Justice initiated an antitrust investigation on the grounds of price manipulation, and Taiwan's major panel companies incurred criminal fines totaling over $800 million, with several executives being sentenced. These policy shocks, combined with the financial crisis and downturn in the industry cycle, ultimately led to a transfer of global panel industry market share and profits to mainland China. CITIC SEC points out that these two cases demonstrate a common pattern: once the high profits of overseas companies are redefined by the U.S. government as damaging to domestic industry competitiveness, political intervention follows, often through the coordinated use of multiple tools such as trade, industry, or antitrust enforcement. Current situation: Focus on supply, political pressure has not yet formed CITIC SEC believes that the key to determining whether high profits in South Korean storage will lead to U.S. government intervention lies in understanding their decision-making mechanisms in technology and economic policies. At present, U.S. policy is still led by core teams in the White House such as Trump and Bessent, while the rising influence of tech right-wingers like Michael Kratsios and David Sacks has also strengthened the impact of U.S. tech giants on policy agendas. Once the issues are defined in the core circles of the White House, implementation is typically carried out by agencies such as the Commerce Department, USTR, the Department of Justice and the FTC using tools related to trade, industry, or antitrust. At the current stage, with strong demand for AI, American businesses are more concerned with ensuring storage supply rather than suppressing the prices and profits of South Korean companies. Politicians are inclined to combine "MAGA" with tech industry policies, by promoting South Korean companies to expand production in the U.S., driving manufacturing, employment, and supply chain return. While sporadic opposition has emerged from American political circles, industry organizations, and consumers against the price increases of South Korean storage, systematic political pressure has not yet formed. Critical point of risk: Cost transmission capability is a key variable CITIC SEC warns that as long as storage costs can still be passed downstream, price hikes are more likely to be seen as part of AI prosperity diffusion, and the political incentive for intervention is relatively limited. However, if prices continue to rise and significantly squeeze U.S. company profits and investment returns, South Korean storage high profits may be redefined by the U.S. government as harmful to American AI competitiveness. The report suggests focusing on two signals: firstly, whether American tech giants shift from securing supply to publicly opposing price hikes; secondly, whether policy decision-makers shift from promoting supply security and expanding production in the U.S. to intervening based on "monopoly," "price manipulation," or "supply chain security" reasons. Rick Switzer's statement may be an early signal of this risk moving from potential to explicit. For SK Hynix and Samsung Electronics, the battleground between the U.S. and South Korea's semiconductor industry is quietly shifting from localized manufacturing to profit distribution levels. This article is a reprint from Wall Street Insights, GMTEight Editor: Chen Wenfang.