During the first half of Joseph Biden's presidency, South Korean companies enthusiastically rushed to expand production in the United States, announcing ambitious multibillion-dollar projects. Now they are faced not only with rising capital costs, but also with political uncertainty due to the upcoming US presidential election.
As The Korea Times explains using the example of Samsung Electronics' initiative to build a new plant in Texas, which was supposed to begin producing 4nm chips for local customers this year, the initially planned budget of $17 billion was no longer enough, since construction alone required $8 billion due to increased prices for building materials and labor costs. In three years, as noted by American statistical authorities, the cost of construction work in the United States has increased by almost a third.
In this situation, South Korean companies are forced to reconsider their own plans for building enterprises in the United States. LG Energy Solution was forced to abandon its plans to build a fourth traction battery plant in Indiana, which it had planned to operate jointly with General Motors. SK On began building similar enterprises together with Ford Motor in the states of Kentucky and Tennessee, but the second enterprise in the first of the states is now delayed in terms of construction, since the demand for electric vehicles is not growing as actively as investors expected. SK On itself is also faced with an increase in operating losses; by the end of the current half of the year they could reach $526 million.
Now Korean companies are counting on the national government, which must negotiate with the American side to provide subsidies adequate to the current situation for the implementation of projects in the United States. However, as the autumn presidential elections in this country approach, the focus of the ruling elites switches to other problems, and therefore it is becoming increasingly difficult for Korean businessmen to count on financial support from the US authorities. Foreign businessmen are in no hurry to count on the favor of Donald Trump if he returns to power.
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