LG, Samsung and SK suspend US construction, spiralling costs causing problems

It appears as though there are some major issues in the US with South Korean companies in Samsung, LG, and SK hynix concerned over US operations.

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The Korea Times has a new report that said "concerned about their investments in the United States amid a spike in construction costs and lingering subsidy uncertainties ahead of the upcoming presidential election in the world's largest economy," according to officials and analysts on Tuesday.

Samsung Electronics invested a rather chunky $17 billion to construct a new chip factory based in Taylor, Texas, which will begin mass production of semiconductors usef for fifth-generation network systems or AI solutions in the second half of the year. But, because of soaring material and labor costs in the United States, Samsung is expected to pony up as much as $8 billion for the construction of the plant.

The outlet reports that officials from the Korean chip industry said the financial costs of their overseas construction for new facilities are increasing, but there's no path for the companies to reduce the financial burden.

an official from a local chipmaker said: "The U.S. investment plans apparently pose a growing financial burden for global chipmakers and any other manufacturing players making facility investments there. Few would have predicted that both the labor and construction costs would rise at this alarming pace. Aside from the inflationary aftermath, we are also faced with political risks ahead of the U.S. presidential election".

Kim Moon-tae, head of an industry policy division at the Korea Chamber of Commerce and Industry, said: "The government is advised to stand at the forefront in discussing subsidy-related issues with its U.S. counterparts, so local chipmakers and battery firms' uncertainties can be alleviated".

Battery companies are also worried about soaring construction costs, with LG Energy Solutions dropping one of its plans to build a fourth battery manufacturing facility in Indiana. The Korea Times reports that this was "triggered by a sharp increase in their construction costs" in the United States.

SK On, a secondary battery affiliate of SK Group, is also under the same financial pressure as its South Korean fivals, teaming with Ford Motor to construct battery factories in Kentucky and Tennessee, but both companies delayed the timeline for starting operations at its second plant in Kentucky all the way into 2027 or beyond, also citing increased construction costs and the slowdown in the electric vehicle (EV) industry.