Major electronics corporations are considering establishing production bases and expanding investments in countries with low tariffs to prepare for the tariff offensive of the Trump 2nd administration. PC manufacturers such as HP and Dell are reportedly reviewing investments in countries like Saudi Arabia, while U.S. memory semiconductor company Micron is carrying out expansion investments in Singapore and Taiwan.
While the Trump administration is erecting tariff barriers across various industries to encourage domestic manufacturing facility investments, this actually means that electronics corporations are opting for diversification of their production bases. Samsung Electronics and LG Electronics are also expected to respond not by increasing investments in the U.S. but by optimizing overseas factories in Mexico and South America or by raising prices.
According to reports from IT media Digitimes and other foreign news outlets on the 25th, companies such as Lenovo, HP, and Dell Technologies are said to be moving their production bases to Saudi Arabia or reviewing transfer options. PC company Lenovo is reported to be building PC and server assembly plants in Riyadh with a $2 billion (approx. 2.857 trillion won) investment from the Saudi Arabian Public Investment Fund (PIF). The facility is expected to be completed this year and will ship laptops, desktop PCs, and servers starting next year.
HP is also investing in PC-related production facilities in Riyadh and plans to produce desktop PCs starting this year. Dell reportedly sent a research team to the local area at the invitation of the Saudi Arabian government, according to Digitimes. Saudi Arabia applies only a 10% mutual tariff, which allows for reduced tariff burdens, and production costs are significantly lower than those in the U.S.
Micron is also emphasizing local investments in the U.S. on the surface, but investments in aging factories located in Idaho, New York, and Manassas are being made on a limited basis. A semiconductor equipment industry official noted, "Micron has been primarily making the latest equipment investments, such as high-bandwidth memory (HBM), in Singapore or Taiwan, with little equipment deliveries to the U.S.," adding that "the cost difference between production in the U.S. and in Taiwan or Singapore is 5 to 6 times, making it unrealistic."
Samsung Electronics and LG Electronics also maintain a cautious stance regarding the establishment and expansion of factories in the U.S. In a conference call regarding the first-quarter performance held on the 24th, LG Electronics revealed that "the Tennessee factory accounts for about 10% of U.S. shipments," but noted that it is "reviewing plans to expand production bases in Mexico and to raise prices to respond to tariffs."
Some speculate that LG Electronics will proceed with expansion investments at its Tennessee factory to increase production capacity, but the general consensus in the industry is that it will be difficult to expand a less productive U.S. factory amid intensifying price competition with Chinese companies. If tariffs return to normal after the Trump administration, issues like depreciation costs for already invested equipment are also likely to become problematic.
Samsung Electronics also has no specific plans regarding additional investments in U.S. factories. An insider familiar with Samsung stated, "The plan to optimize existing production bases is the most prominently under review," and explained that "establishing new U.S. factories or expanding factory sizes may remain as a last resort, but considering production expenses, it is not a preferred option."
The unclear outline of semiconductor tariffs also remains a variable. Industry experts observe that if the U.S., which currently relies heavily on imports for advanced semiconductors, imposes high tariffs, concerns about IT inflation will make it difficult to easily impose tariff bombs. With TSMC's accumulating losses after establishing a foundry in Arizona, Samsung Electronics is also likely to adopt a conservative approach.
An electronics industry official stated, "In the case of major production lines, including electronics products, displays, and semiconductors, it normally takes at least 3 to 4 years from planning to equipment investment and operations, so making large-scale investments to prepare for Trump tariffs is likely to be strategically self-defeating. Given that even U.S. companies are avoiding domestic facility investments, our corporations should not have to bear unnecessary risks."