AI Chip Location Rules: Impact on Korean & Global Chipmakers

The Trump administration's strengthened AI chip export controls in 2025 and the mandated 'location verification' are shaking up the global semiconductor ecosystem. This measure, which enables real-time tracking and blocking of advanced chips from US companies like Nvidia and AMD from flowing into countries of concern like China, represents a new turning point in the technological hegemony competition. We provide an in-depth analysis of the dual effects: strengthening US technological leadership vs. weakening the global innovation ecosystem.

The July 2025 announcement by the Trump administration of strengthened AI chip export controls is more than simple trade regulation - it's a declaration of intent to create a new order of technological hegemony. The unprecedented surveillance system called 'Location Verification' mandate embodies the will to block advanced chips from US companies like Nvidia and AMD from flowing into countries of concern, including China, in real-time. This signifies a shift from existing document-based export restrictions to a system capable of technological tracking and remote control.

Precise Technology Control Shakes the Global AI Ecosystem

America's new export controls track not only the final destination of chips but also their actual usage locations and applications in real-time. What was previously 'destination restrictions' relying on contracts and administrative documents has now transformed into a 'digital surveillance network' that monitors down to individual server racks within data centers. While the US government cites national security as justification, beneath this lies a strategic calculation to permanently establish America's technological leadership in the AI field. The intention to fundamentally block China's AI rise and establish a technology order centered on allies is particularly clear.

Global Ripple Effects: A Duet of Opportunities and Risks

This measure is having contrasting effects on the global AI industry. Allied countries maintaining close relationships with the US - Korea, Taiwan, Europe, Japan - have gained opportunities to strengthen their AI competitiveness while securing relatively stable chip supplies. Conversely, China and emerging nations in the Middle East and Southeast Asia face serious constraints in AI development and digital transformation as access to advanced chips is blocked. More concerning is that the entire global AI innovation ecosystem is being reorganized around the US as even indirect exports through third countries are being blocked.

America's Paradox: A Game Where Victory and Loss Coexist

Through this measure, the US has strengthened its technological leadership and national security in the short term, but faces the possibility of unexpected boomerang effects in the long term. US companies like Nvidia and AMD must accept revenue losses from massive markets including China, while operational costs for real-time chip tracking and management are rapidly increasing. A more serious problem is that as needs for 'reducing dependence on America' grow among global customers, countries are beginning to invest earnestly in developing their own semiconductor technologies. Consequently, the US finds itself in a dilemma of sacrificing future market dominance to protect current monopoly.

China's Response: From Self-Reliance to Counterattack

China is accelerating its 'semiconductor rise' in response to America's technological blockade. Huawei's proprietary chipset development, SMIC's process technology improvements, and massive government-level semiconductor investments are already beginning to show tangible results. Although a technology gap currently exists compared to the US, the combination of China's massive domestic market and concentrated investment makes it highly likely to achieve considerable technological self-reliance within 5-10 years. Furthermore, China is forming a new bloc opposing the US-centered technology order by exporting its domestic technologies to developing countries through the Belt and Road Initiative.

The Paradox of Global Innovation: Technology Self-Reliance Competition Triggered by Division

America's export controls have unintentionally triggered a worldwide 'technology self-reliance competition.' Europe has embarked on building semiconductor production bases through the 'Chips Act,' Japan is combining TSMC attraction with domestic company development, and Korea is expanding from memory to system semiconductors through the K-Semiconductor Belt project. While these changes bring positive effects of supply chain diversification in the short term, they risk leading to redundant investment in technology development and standard fragmentation in the long term. Concerns are growing that innovation speed for humanity as a whole may slow as global cooperation in AI research becomes restricted.

Recommendations for Future Order: A New Balance of Cooperation and Competition

The current technological hegemony competition should be approached from a win-win perspective rather than a zero-sum game. The US must find a balance point where it protects national security and technological superiority without undermining the vitality of the global innovation ecosystem. Simultaneously, countries must build multilateral governance systems for research cooperation and standard integration while strengthening technological self-reliance capabilities. Global issues like AI ethics, data security, and technology accessibility particularly require joint responses that transcend individual national interests. True technological progress will be possible when technology becomes a platform for humanity's common prosperity rather than a tool for division and confrontation.

The 2025 US AI chip export controls will be recorded as an important turning point in technological history. Trump's choice could either secure a more solid position for the US in the AI market or, conversely, cause it to lose dominance in the AI market. The changes this measure will bring signify not merely changes in trade patterns but fundamental reorganization of the global technology order. What's important is making wise choices that ensure technology serves humanity's common interests amid these changes. Trump will do as he pleases no matter how much criticism he faces. It's time to create an era of wise cooperation and competition where the global AI community keeps open possibilities for cooperation amid division and competition, and works toward a future where technology's benefits reach the many, not the few.