South Korea’s $150 Billion U.S. Investment: A Short-Term Gain or a Strategic Trap?

Just today, South Korea made a sudden announcement!

On August 26, South Korea revealed plans to invest about $150 billion in the United States, primarily in semiconductors, batteries, and electric vehicles. In semiconductors, Samsung and SK Hynix plan to build new chip manufacturing plants in the U.S. In the battery and EV sectors, LG and Hyundai are continuing to expand their battery facilities in the U.S.

In addition, Samsung Biologics also plans to relocate its fifth and sixth plants to the United States. With these companies moving collectively, the U.S. is certainly delighted. However, the story behind this collective expansion may not be so simple.

The main reasons behind South Korean companies’ large-scale move to the U.S. can be summarized in three points:

1. Strong Dollar, Weak Won.

It’s well known that recently the U.S. dollar has remained strong, while the Korean won has been one of the weakest-performing currencies against it. Under these conditions, Korean firms investing in the U.S. can effectively leverage a stronger dollar to gain more in other currencies, making it profitable in the short term.

2. Incentives from the U.S. Inflation Reduction Act (IRA).

The IRA provides up to a 35% investment tax credit. This legislation has granted substantial benefits to U.S. domestic firms. Although Korean companies may not fully benefit from these incentives immediately, establishing operations in the U.S. first and later bringing some production back to Korea is a strategic move they clearly recognize.

3. U.S.-China Tech Rivalry Pressures Korea.

With intensifying high-tech competition between the U.S. and China, Washington’s stance toward Korea has shifted—from early cooperation and support to more conditional backing, and in some areas, even competition. In this climate, the safest option for Korean firms is to align closely with the U.S., effectively becoming “second-in-command” to American companies.

These reasons explain why Korean companies are expanding overseas. But the question remains: Is this truly beneficial for Korea?

In the short term, yes.

Building factories in the U.S. allows Korean companies to enjoy large subsidies and secure substantial orders—clear and immediate benefits.

But in the long run, not necessarily.

Ultimately, the most critical factor is who controls the core technologies and supply chains. If those remain firmly in U.S. hands, then no matter the subsidies or contracts, South Korea risks losing leverage. Once fully committed, Korean companies may find themselves unable to retreat.

If retreat isn’t possible, then this mass expansion essentially strengthens America’s ability to counter China in high-tech fields—turning Korea into a supporting player rather than a strategic leader. This reflects not just a principle of small, immediate gains, but also a harsh reality of long-term dependency.

In my view, South Korea’s current move feels like “trading long-term independence for short-term sugar.” Sure, in the short run, companies benefit: the dollar is strong, there are tax perks, and they can rely on the U.S. “big tree.” But in the long run, it may not be so cost-effective.

After all, if the U.S. holds the decisive power over core technology and supply chains, a tightening of policies could leave Korean firms caught in a dilemma.

To put it bluntly, this seems more like a forced choice under current geopolitical pressures—seeking subsidies and protection while navigating the U.S.-China rivalry. Whether this turns into sustainable partnership or simply “working for someone else” depends on how things unfold.

But betting everything on another country always carries uncertainty.

What do you think?