Navigating Geopolitical Crosscurrents: U.S.-South Korea Trade and Immigration Policies Reshape Semiconductor Investments

The global semiconductor industry, a linchpin of modern economic and national security strategies, is increasingly shaped by the interplay of U.S.-South Korea trade policies and domestic immigration enforcement. As geopolitical tensions and regulatory shifts converge, multinational manufacturers face a complex landscape of risks and opportunities. This analysis examines how evolving enforcement actions—particularly those under U.S. Immigration and Customs Enforcement (ICE)—and trade dynamics are recalibrating investment decisions in the semiconductor sector.

Trade Policy Dynamics and Semiconductor Supply Chains

The U.S.-South Korea trade relationship has been marked by both collaboration and friction. The Indo-Pacific Economic Framework for Prosperity (IPEF), launched in 2022, initially promised deeper integration but has seen limited progress on trade-related commitments as of late 2024, with focus shifting to supply chain resilience and anti-corruption measures [1]. Meanwhile, South Korea’s growing trade surplus with the U.S.—nearly tripling since 2017—has been driven by semiconductor exports, which account for 18.7% of its total exports in 2024 [1]. However, political instability and economic slowdowns in South Korea threaten to disrupt this flow, indirectly affecting U.S. manufacturers reliant on its components.

The Trump administration’s imposition of 25% reciprocal tariffs on South Korean goods in 2025 has further strained relations, undermining the U.S.-South Korea Free Trade Agreement (KORUS FTA) and prompting South Korea to pivot toward productivity-driven growth [4]. These tariffs have forced semiconductor firms to reevaluate supply chains, with companies like Samsung and SK Hynix accelerating U.S. manufacturing investments to mitigate risks. For instance, Samsung’s $37 billion Texas fab and SK Hynix’s $3.9 billion Indiana facility are direct responses to tariff uncertainties [8].

Immigration Enforcement and Workforce Vulnerabilities

While trade policies shape the macroeconomic environment, U.S. immigration enforcement actions under ICE have introduced acute operational risks. The semiconductor industry’s reliance on immigrant labor—particularly in STEM roles—is profound. In 2021, 22.7% of the U.S. semiconductor workforce was foreign-born, with 56% of doctorate-level engineers being immigrants [7]. ICE’s intensified raids, such as the 2025 operation at a Hyundai-LG battery plant in Georgia, which detained 475 undocumented workers (many Korean nationals), underscore the fragility of this labor model [5].

Such enforcement actions create dual challenges: immediate labor shortages and long-term reputational risks. For example, Microchip Technology Inc. has flagged immigration policies as a barrier to hiring foreign graduates of U.S. universities [6]. The cancellation of work permits and expedited removals under ICE’s 15,000-audits-per-year target exacerbate these issues, pushing companies to invest in automation or raise wages—a costly adaptation [3].

Corporate Responses and Strategic Adjustments

Multinational firms are adopting multifaceted strategies to navigate these crosscurrents. The U.S. CHIPS Act, with its $52 billion in incentives, has become a critical tool for reshoring production. South Korean firms, in particular, have leveraged these subsidies to expand domestic footprints, aligning with U.S. national security priorities while securing access to local markets [9]. However, the fluidity of trade policies—such as Trump’s proposed tariffs—introduces uncertainty, delaying projects like Samsung’s Texas fab, which was postponed from 2024 to 2026 [8].

Immigration reform is another focal point. Companies are advocating for streamlined visa processes and increased H-1B quotas to retain global talent. The semiconductor industry’s reliance on immigrant workers in non-STEM roles (e.g., 43.9% of electrical assemblers in electronics manufacturing are foreign-born [7]) further underscores the need for policy flexibility.

Looking Ahead: Risks and Opportunities

The interplay of trade and immigration policies will remain a defining factor for semiconductor investments. For U.S. policymakers, balancing national security imperatives with labor market needs is critical. For South Korea, diversifying its economic model beyond export dependency will be essential to weather geopolitical storms. Investors must monitor three key trends:
1. Tariff Volatility: Reciprocal tariffs and IPEF negotiations could reshape trade flows.
2. Workforce Resilience: Immigration enforcement and STEM education reforms will dictate long-term supply chain stability.
3. Corporate Adaptability: The speed at which firms adopt automation or dual-source strategies will determine their competitive edge.

In this high-stakes environment, strategic foresight and policy agility will be paramount. The semiconductor industry’s future hinges not only on technological innovation but also on the geopolitical and regulatory frameworks that govern its global ecosystem.

Source:
[1] South Korea: New challenges [https://economic-research.bnpparibas.com/html/en-US/South-Korea-challenges-2/11/2025,51312]
[2] International Trade 2025 - USA | Global Practice Guides [https://practiceguides.chambers.com/practice-guides/international-trade-2025/usa/trends-and-developments]
[3] Potential US semiconductor manufacturing boom complicated [https://djcoregon.com/news/2025/05/21/trump-tariffs-us-semiconductor-growth/]
[4] South Korean Policy in the Trump and China Era [https://itif.org/publications/2025/05/18/south-korean-policy-trump-china-era-broad-based-technological-innovation/]
[5] Homeland Security's historic immigration raid nets 475... [https://weartv.com/news/nation-world/450-unlawful-aliens-detained-in-ice-immigration-raid-at-hyundai-battery-plant-in-savannah-georgia-bryan-county-fbi-dea-dea-state-patrol-homeland-security-south-korea]
[6] Business Risks Rise in Tandem With Broader Immigration... [https://news.bloomberglaw.com/esg/business-risks-rise-in-tandem-with-broader-immigration-crackdown]
[7] The Success of the CHIPS Act Depends on Skilled... [https://www.americanimmigrationcouncil.org/blog/chips-act-needs-immigrants/]
[8] Trump's chip tariff threat stirs jitters; impact on Samsung... [https://www.kedglobal.com/business-politics/newsView/ked202508070011]
[9] The US and Korean CHIPS Acts are spurring investment... [https://www.piie.com/blogs/realtime-economics/2024/us-and-korean-chips-acts-are-spurring-investment-high-cost]