U.S. President Donald Trump announced plans to impose a tariff of about 100% on semiconductors, raising concerns that it will negatively impact Hyundai Motor Company and Kia, which manufacture automobiles in the United States. Since Hyundai Motor Company and Kia primarily procure automotive semiconductors from European and Japanese companies, if tariffs are applied, production expenses are likely to increase and profitability could deteriorate.
On the 6th (local time), President Trump mentioned Apple's U.S. investment plan at the White House, saying, "A 100% item-specific tariff will be applied to semiconductors imported into the United States." He noted, however, that "products from companies that produce semiconductors in the United States or have promised to produce them domestically will not be subject to tariffs."
If a 100% tariff is imposed on semiconductors, semiconductor manufacturers with major U.S. IT companies as clients will face direct impacts. However, automotive companies using components equipped with semiconductors will also inevitably suffer damage. Hyundai Motor Company had to halt operations at its Alabama plant in the United States twice in 2021 and 2022 due to issues with semiconductor supply, highlighting the significant share semiconductors hold.
Currently, the global automotive semiconductor market is dominated by major semiconductor manufacturers such as Germany's Infineon, the Netherlands' NXP, and Japan's Renesas, forming a "three-power structure." Domestic component companies, including Hyundai Mobis and HL Mando, procure most of their automotive semiconductors from these firms to manufacture engines, transmissions, various sensors, and autonomous driving systems, which are then supplied to automotive companies.
Infineon, NXP, and Renesas all have factories in Texas. However, since a vast variety of semiconductors are equipped in automobiles, a significant number of components are produced outside the United States. Infineon has major production facilities in Europe, including Germany, Austria, and Hungary, and manufactures automotive semiconductors for export in Malaysia. NXP also has factories in the Netherlands, Singapore, and Malaysia.
Hyundai Motor Group stated that semiconductors account for about 3% of the cost in completed vehicles, so even with tariffs imposed, it would not be significantly impacted. However, they expressed concern that since a substantial amount of the production is sourced from overseas, if tariffs are not reflected in prices in a timely manner, profitability could inevitably deteriorate.
The Trump administration had previously raised tariffs on steel from the existing 25% to 50% in June. Hyundai Motor Company and Kia source all their steel plates from their affiliate Hyundai Steel. Consequently, until the Hyundai Steel plant in Louisiana, which is set to be built in the United States, commences operations in 2029, production expenses are expected to increase significantly.
An industry official in the automotive sector said, "President Trump's remarks about raising tariffs on semiconductors by 100% seem to be a threat to encourage domestic investment," adding, "Considering his track record of pressuring global corporations using tariffs, there is a high possibility that Hyundai Motor Company and Kia will frequently face difficulties due to raw material supply issues in the future."