Government Urges U.S. for "Special Consideration" for Korea, Citing Investment Risks from Polysilicon Tariffs

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The South Korean government has requested "special consideration" from the United States for Korean companies, expressing concerns that U.S. restrictions on imports of polysilicon?a key material for solar panels and semiconductors?could hinder Korean investment in the U.S.

Reuters Yonhap News

According to the U.S. Federal Register on August 10 (local time), the South Korean government submitted an opinion to the U.S. Department of Commerce on August 6, asking that if imports of polysilicon and its derivatives are restricted, special consideration should be given so that Korean companies can be treated flexibly.

The Trump administration is currently conducting an investigation under Section 232 of the Trade Expansion Act to determine whether polysilicon is critical to national security and whether import restrictions such as tariffs are necessary. In this context, the South Korean government emphasized that imposing tariffs on polysilicon could disrupt critical supply chains for both the U.S. and South Korean economies and their national security, especially as Korean companies are investing in solar and semiconductor production in the United States.

The government cited Hanwha Qcells' investment in a solar panel manufacturing facility in Georgia and OCI's investment in a solar cell production facility in Texas, requesting that Korean companies contributing to the diversification of the U.S. supply chain be exempted from import restrictions such as tariffs. The government also pointed out that imposing tariffs on polysilicon could increase semiconductor manufacturing costs in the U.S., worsen the profitability of companies investing in the U.S., and make it difficult to achieve the goals of semiconductor production reshoring and supply chain strengthening.

Hanwha Qcells, which imports polysilicon to the U.S. to produce solar modules, also submitted an opinion, arguing that the U.S. government should protect American polysilicon producers from unfair practices by Chinese companies. Hanwha Qcells proposed that the U.S. impose a $10 per kilogram tariff on imported polysilicon, but set a tariff rate quota (TRQ) for solar-grade polysilicon imported from Germany and Malaysia, allowing duty-free imports of up to 20,000 tons per country annually.

Hanwha Qcells further suggested that for solar ingots, wafers, and cells made from polysilicon produced in the U.S., Germany, or Malaysia, TRQ allocations should be applied, while for modules, a universal tariff of 20 cents per watt should be imposed regardless of country of origin. Hanwha Qcells explained that it sources all the polysilicon used in its U.S. factories from Malaysia, and that solar cells made from Malaysian polysilicon are imported from Korea and Malaysia to the U.S. for module production.

OCI, which produces semiconductor-grade polysilicon, stated that it has completely excluded forced labor and Foreign Entity of Concern (FEOC) from its supply chain and requested that semiconductor-grade polysilicon not manufactured by FEOCs and compliant with fair trade be excluded from the investigation.

The government also submitted its opinion on unmanned aerial systems (UAS), which are included in the U.S. Department of Commerce's Section 232 investigation. The government pointed out that "a small number of companies located in a single country" dominate the UAS market, creating an unfavorable environment for new market entrants and posing a risk of severe supply chain disruptions through intentional supply cuts or sudden price increases.

The government also noted that, along with "supply chain imbalances," cybersecurity risks such as malicious software attacks on UAS are increasing. It stated, "South Korea shares the U.S. government's concerns about supply concentration, market distortion, and the risk of weaponization in the global UAS market." While not naming a specific country, this expressed concerns about China's dominant position in the UAS market.

The government proposed that the U.S. cooperate with its ally South Korea to strengthen the UAS supply chain and urged that the investigation be conducted in a "reasonable and predictable manner consistent with U.S. national security objectives."

This content was produced with the assistance of AI translation services.