On the 20th (local time), as the second term of the Trump administration is about to begin, tension is rising within domestic industries such as semiconductors and automobiles.

President-elect Trump has previously expressed negative views on semiconductor subsidies and the Inflation Reduction Act (IRA) in the battery industry. There is also a high likelihood that he will implement policies such as withdrawing from the Paris Climate Agreement, lifting the electric vehicle mandate, and halting offshore wind energy development. As a result, domestic companies are seen working diligently to prepare for uncertain market conditions.

According to industry sources on the 19th, the second term of the Trump administration is expected to continue the semiconductor export controls against China initiated by the Biden administration. The Biden administration expanded domestic semiconductor manufacturing through the CHIPS Act and planned to regulate the export of advanced semiconductors to China.

As a result, South Korean semiconductor companies are planning to focus on establishing local production systems in the U.S. and expanding their technological competitiveness.

Currently, Samsung Electronics operates NAND flash production plants in Xi'an and Suzhou, China, as well as semiconductor back-end processing (packaging) plants. SK hynix has DRAM plants in Wuxi, back-end processing plants in Chongqing, and a NAND plant in Dalian.

These companies are building factories in the U.S. to respond to export regulations. Currently, Samsung Electronics' plant being constructed in Taylor, Texas, is expected to begin mass production in 2026. SK hynix's Indiana plant is also anticipated to start production of high-bandwidth memory (HBM) and other AI memory products in the second half of 2028.

The South Korean battery industry already has a significant number of factories in the U.S., giving it a competitive edge. Additionally, South Korean companies possess core technologies that enable them to respond effectively to export controls and protectionist trade policies in the medium to long term.

However, challenges are expected due to Trump's protectionist trade policies and China's increased export controls to the U.S. Ultimately, the battery industry finds itself in a situation where government support is critical.

The South Korean battery industry has historically relied on importing raw materials from China, producing intermediate materials such as anode and cathode materials domestically, and manufacturing finished battery cells in the U.S. under this structure. The Inflation Reduction Act (IRA) recognizes processed battery materials from countries with which the U.S. has free trade agreements (FTAs) as equivalent to domestic materials, qualifying for electric vehicle consumer subsidies.

However, if the Trump administration imposes tariffs on battery materials, the South Korean battery industry will inevitably need to restructure its business operations in order to maintain its competitiveness.

There is a high likelihood that companies will either build new factories or expand their existing facilities in North America. For cathode materials, which have the highest cost share, EcoPro BM, LG Chem, and POSCO Future M are all constructing factories in North America. Among them, LG Chem's Tennessee plant (with an annual production capacity of 120,000 tons) is the only one located in the U.S., while POSCO Future M and EcoPro BM are building plants in Canada.

The automotive industry plans to adapt flexibly by adjusting its strategy to focus on eco-friendly vehicles. South Korea's automotive industry accounted for about 60% of the country's total trade surplus with the U.S. last year, solidifying its position as a "key export" industry for South Korea.

Hyundai Motor Group plans to reduce electric vehicle production at its local factories and increase the production of eco-friendly vehicles, including hybrid cars, in line with the Trump administration's election promises to abolish electric vehicle subsidies and remove penalties for internal combustion engine vehicles.

Hyundai Motor Group plans to focus on the production of the Palisade Hybrid, which is scheduled for release in the U.S. in the second half of this year, and the Genesis Hybrid, which is still under development, at the "Hyundai Motor Group Metaplant America (HMGMA)" that began operations in October last year. The group will also start production of the large flagship electric sports utility vehicle (SUV) Ioniq 9, which is set to be launched this year.

Additionally, the export and import regulations for connected cars are favorable to South Korean companies. The U.S. government, in its confirmation on the 14th, included a provision in the connected car-related regulations that gradually bans the sale of vehicles using Chinese and Russian software components for autonomous driving or communication functions. These regulations will apply to software starting with 2027 models and to hardware starting with 2030 models.

Hyundai Motor Group is expected to benefit from these regulations. The group is currently collaborating with NVIDIA on AI programs and is pursuing autonomous taxi services in partnership with Waymo, a Google subsidiary, which is the world's leading robo-taxi company. Additionally, through its subsidiary, Motional, Hyundai Motor Group is focusing on advancing fully autonomous driving technology in the U.S.

Additionally, Hyundai Motor Group donated $1 million (approximately 14.7 billion won) to the inauguration of U.S. President Donald Trump as part of its response to the uncertainties of his second term. This is the first time Hyundai Motor Group has made a donation to a U.S. presidential inauguration since its entry into the U.S. market.

An industry insider stated, "It is difficult to predict what will happen after President Trump's inauguration," and added, "We need to watch how things will unfold after the start of the Trump administration and prepare flexible strategies for North America, which is our key market."

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