Howard Lutnick, President Donald Trump's nominee for U.S. secretary of commerce, appears before the Senate Committee on Commerce, Science, and Transportation for his confirmation hearing on Capitol Hill in Washington, Wednesday (local time). AP-Yonhap

The United States' secretary of commerce nominee has cast uncertainty over the U.S. government's promised subsidies to Korean semiconductor makers, as he called for a review of the program in line with the Donald Trump administration's skepticism about it.

Samsung Electronics and SK hynix, Korea's two main chipmakers, are paying keen attention to whether the subsidies promised by the previous Joe Biden government for their U.S. investment would be delayed or, in the worst-case scenario, canceled.

Howard Lutnick, Trump's pick to head the Department of Commerce, made relevant remarks during the Senate Commerce Committee's confirmation hearing on Capitol Hill in Washington, Wednesday (local time). They were part of his bigger agenda on boosting market competitiveness for made-in-America goods by slapping more disadvantageous conditions on imports, such as heavier tariffs.

Earlier, the Biden administration introduced the CHIPS and Science Act to attract more global semiconductor companies to build manufacturing plants in the U.S. by offering subsidies to them.

Prior to Trump's inauguration, the U.S. commerce department said in December it decided to provide Samsung Electronics with over $4.7 billion to support its chipmaking investment in Texas, and SK hynix with up to $458 million for its investment in Indiana.

When asked if he would carry on with the previous government's subsidy program, Lutnick said he cannot guarantee that until he analyzes the program and understands it.

"We need to study it, but we need to make sure that you get the benefit of the bargain and domestic manufacturing happens in America," he said during the hearing.

"We want to look at the supply chain and bring that back to America. We want to create those great jobs in America. So that way, we can go back to innovating, which is where we began. Intel began the chips, right? And then the world sort of leveraged our chips. TSMC leveraged us and sort of took it from us," he added. TSMC is a Taiwanese tech giant, which Trump had accused many times last year of "stealing" the U.S.' chip industry.

The Samsung Austin Semiconductor plant in Taylor, Texas, is seen in this April 16, 2024, photo. AFP-Yonhap

Although Lutnick said the CHIPS act is an "excellent down payment" to begin the process of bringing semiconductor manufacturing to the U.S., when asked if he will stick to the CHIPS programs, he said, "We get the money out appropriately and correctly, and we build in America ... that is vital."

Lutnick also left a thorny message to countries trading with the U.S., singling out many of its allies, including Korea.

"Our great allies have taken advantage of our good nature, and they ... like steel in Japan and appliances in Korea ... I mean, they have just taken advantage of us," he said. "It is time for them to partner with us and bring that production back home."

Tariff influences on Korean firms

Besides the subsidy issue, Lutnick's remarks and Trump's threats to hit imports with heavier tariffs have also been rattling Korean companies with overseas manufacturing bases. The tension specially intensified shortly after Trump said he would introduce 25 percent tariffs on imports from Mexico and Canada next month. Trump said the measure is a head start for his government's new trade policies that will introduce a universal tariff plan which aims to impose tariffs of 10 percent to 20 percent on all imports.

In response to these threats, Samsung is considering producing its laundry dryers in the U.S. state of South Carolina instead of the Mexican state of Queretaro. Samsung Electro-Mechanics already put off its plan to build an automotive camera module factory in Mexico.

LG Electronics is also said to be considering relocating its refrigerator production line from the Mexican city of Nuevo Leon to the U.S. state of Tennessee, which accommodates the company's factories producing laundry machines and dryers. The company's Chief Financial Officer Kim Chang-tae said that if the tariff hike is too rapid, the company can consider relocation of production bases and adjustments to its capacity.

Korean carmakers face bigger difficulties relocating their factories due to the large size of their investments compared to home appliances manufacturers. This disadvantage also prevents batteries and other components producers from leaving Mexico and Canada for a while.

POSCO International, which supplies traction motor cores for Kia's electric vehicles, said it will keep its factory in Mexico unless the Korean carmaker giant relocates its nearby factory to another country.