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US President Joe Biden poses for a photo with leaders of ASEAN nations on the South Lawn of the White House on May 12. (Yonhap News)

The South Korean business world is feeling increasingly concerned ahead of a South Korea-US summit scheduled for this weekend. With major corporations having already announced plans for large-scale investment in the US at a previous summit in Washington last year, they are now worried they will be obliged to come up with another “gift basket” for the visiting US president.

According to accounts Monday from sources in major corporations, it remains uncertain what requests the Office of the President and related agencies will make in connection with the South Korea-US summit this weekend and investment in the US.

“Under the Moon Jae-in administration, summit matters were coordinated directly by the Blue House,” explained an executive in charge of external business for one of South Korea’s five major groups.

“There isn’t much time left, but Yongsan still hasn’t coordinated anything related to specifics apart from the meeting schedule,” they added, referring to the presidential office.

Sources with South Korea’s business groups said the meetings with US President Joe Biden were reportedly going to be expanded beyond the four major groups — Samsung, SK, Hyundai Motor, and LG — to include Lotte, Hanwha, OCI, and Naver as well.

The business world is perturbed about the prospect of being called upon to offer additional “big gifts” when Biden comes to visit. The major group’s position is that they already shared plans for major investments in the US during the Washington summit between Moon and Biden a year ago.

“We already announced our plans for investing in the US over the next three to five years at the South Korea-US summit in Washington a year ago, and we’re not in a position to come up with new large-scale investment plans only a year later,” said an executive in charge of external cooperation for one of the four major groups.

“Internally, we’re working on fleshing out the investment plans we pledged last year,” they explained.

At the time of the May 2021 summit, Samsung Electronics made plans for investing US$17 billion in semiconductor foundry production, while LG and SK pledged US$14 billion toward production through an electric vehicle battery joint venture. Hyundai Motor made plans to invest US$7.4 billion through 2025 in areas such as EV production facilities in the US.

Ahead of Biden’s visit, foreign news outlets have recently been reporting that Hyundai Motor is setting up an EV production line in the southern state of Georgia, but that amounts to a concrete step toward executing the EV investment plan from one year ago, rather than an example of new investment. At the time, the four major groups pledged 44 trillion won in investment in the US — amounting to one-quarter of their total annual domestic facility investment.

The four groups based their investment decisions on considerations including the presence of a partner in areas of intense global competition such as semiconductors and batteries; proximity to consumer markets; and tax benefits and infrastructure provided by the US government.

But at a time of cutbacks amid the war in Ukraine, global supply chain woes, and inflation, the business community is concerned that now is not the time for active overseas investment.

“Recently, excess semiconductor demand has left the Taiwanese foundry heavyweight TSMC and Samsung Electronics pushing to raise their unit prices,” explained a semiconductor industry insider.

“Increasing production lines is a process that takes years, and with supplies running short, we’re in a situation where we need to manage profitability,” they added.

Under the circumstances, many observers are predicting that the Biden administration may focus less on new investment in the US than on calling for swift action to honor the previous investment pledges, along with strategic cooperation to protect the interests of US companies such as Apple and Google.

“This time around, we’re expecting that the government’s response is going to be diplomatically focused, such as [Seoul] expressing a proactive position on things like the Indo-Pacific Economic Framework to contain China,” said an official in charge of strategy for one of the four major groups.

“I’m not sure when it will happen, but it may end up that the ‘gifts’ for Yoon Suk-yeol’s return visit are more important,” the official suggested.

By Kim Hoe-seung, staff reporter

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