Profit sharing, the latest US shakedown

There is an old adage in international affairs that it may be dangerous to be the United States' enemy, but to be the US' friend is fatal. The allies of the US in its self-declared semiconductor crusade are learning this lesson in real time.

The latest country to feel the weight of truth in this adage is the Republic of Korea which the US administration is reportedly demanding to hand over a slice of the profits generated by the ROK's chip champions.

According to ROK media reports, Deputy US Trade Representative Rick Switzer told ROK Trade Minister Yeo Han-koo in a recent meeting that US companies' large-scale purchases of ROK semiconductors had directly contributed to the record earnings of SK Hynix and Samsung Electronics, and that the US therefore deserves a share of the profits.

This is not a serious economic argument. It is a shakedown.

By this standard, any customer who buys a product in bulk would be entitled to a permanent claim on the seller's profits.

The ROK's semiconductor exports tell the story of the AI boom. In the first half of this year, they reached a record $192.4 billion, up 162.5 percent year-on-year, with shipments to the US soaring 91.3 percent to $26.4 billion. In June alone, semiconductor exports to the US jumped 377.2 percent. Washington now looks at these figures with envy and avarice. It has therefore decided that the profits belong, at least in part, to it.

This is not an isolated demand. The US has spent the past few years constructing a "chip alliance" ostensibly aimed at containing China's technological rise. The Netherlands' ASML has been forced to curtail sales to its largest growth market. China will still contribute around 20 percent of its 2026 revenue, but that is down from roughly 33 percent in 2025, and the US is pushing to cut even that.

Japan's semiconductor equipment makers have seen their China sales plummet as they comply with Washington's export controls. China's Taiwan region, which US President Donald Trump has repeatedly accused of "stealing" the US' chip business, is being pressured to relocate its most advanced foundries to US soil.

The pattern is unmistakable. The US allows its own chipmakers to continue exporting certain models to China — the H200 was authorized in December 2025 — in a carefully calibrated "toothpaste-squeezing" manner designed to maintain a technological gap while still capturing revenue.

Meanwhile, its allies are expected to sacrifice their own commercial interests without compensation. ASML, the Dutch giant that holds a near-monopoly on lithography machines, now faces the prospect of the MATCH Act, which would ban even servicing of machines already installed in Chinese fabs. This is not alliance management. It is exploitation.

The Joe Biden administration initially framed the "chip alliance" around "shared values". The current US administration has dispensed with that rhetoric, leaving behind exploitative relationships in which allies are expected to pay for the privilege of alignment, while Washington pockets the proceeds. The claim on ROK semiconductor profits is merely the most naked expression of the US mugging its allies.

The deeper irony is that the entire strategy is self-defeating. Economic globalization in the semiconductor sector cannot be severed. China is not a small economy that can be isolated; it is a massive market deeply integrated into global supply chains. Every restriction accelerates the country's push for self-reliance. The more the US pressures its allies to cut off China, the faster China develops alternatives. Containment becomes a self-fulfilling prophecy of "decoupling".

But the cost of the US approach will be borne by the US' allies. Japan knows this. The Netherlands knows this. And now the ROK knows it too. The message from Washington is clear: you will sacrifice your markets, restrict your exports, and when you succeed despite all of this, we will return to collect our share.

There is an alternative. The US could treat its allies as partners rather than tributaries. It could acknowledge that the global division of labor in semiconductors is not a zero-sum game. It could recognize that a prosperous and independent Europe, Japan and the ROK are in its long-term interest. But that would require true statesmanship.

The old adage may need updating. It is not merely fatal to be the US' friend. It is becoming expensive. And the bill is growing by the quarter.