The Positive Impact of South Korean Investment Projects in the U.S. on U.S.-South Korea Relations
Won-mok Choi
Professor
Ewha Womans University Law School
The U.S.-South Korea alliance stands at a new turning point. Established in 1953 on the basis of the U.S.-Korea Mutual Defense Treaty, the alliance has long been centered on military and security cooperation. As trade and investment expanded, it evolved into an economic alliance, and the scope of cooperation is now broadening to encompass strategic industries directly linked to the future competitiveness of both countries—including semiconductors, batteries, AI, nuclear power, shipbuilding, critical minerals, and energy. At the heart of this transformation are South Korea’s large-scale investment projects in the United States.
Through the Strategic Investment Memorandum of Understanding (MOU) signed last year, South Korea and the United States established a framework under which South Korea would pursue investments in the United States totaling $350 billion. Of this amount, $150 billion is earmarked for shipbuilding cooperation aimed at rebuilding and modernizing the U.S. shipbuilding industry, while $200 billion is designated for investment in strategic sectors such as shipbuilding, energy, semiconductors, pharmaceuticals, critical minerals, artificial intelligence (AI), and quantum computing. The White House has also stated that the two countries have agreed to advance their shared economic and national security interests through these investments.
In June 2026, the Korea-U.S. Strategic Investment Corporation, dedicated to overseeing this cooperation, was officially launched. The South Korean government established the legal framework for managing these investments pursuant to the Korea-U.S. Strategic Investment Special Act, which was passed by the National Assembly in March, and began systematically managing strategic investments in the United States through the corporation.
This goes beyond simply investing large sums of money in the United States. Rather, the key lies in connecting the industrial ecosystems of South Korea and the United States into integrated value chains and creating a structure in which the two countries complement each other’s industrial strengths and address their respective vulnerabilities to jointly enhance future competitiveness.
Investment in the U.S. is both an “investment in the United States” and an “investment in the U.S.-Korea alliance.”
The reason U.S. President Donald Trump emphasizes South Korea’s investment in the United States is clear. At the core of the economic policies pursued by the Trump administration are the goals of strengthening the U.S. manufacturing base, expanding energy production, establishing critical supply chains within the United States, rebuilding the shipbuilding industry, and maintaining competitiveness in advanced technologies. The United States views the revitalization of its shipbuilding industry, in particular, as a matter of national security. In a 2025 executive order, President Trump emphasized that U.S. commercial shipbuilding capacity and maritime industrial infrastructure had been weakened over the long term and that restoring them was necessary not only for economic competitiveness but also for national security. The U.S. government noted at the time that the United States accounted for less than 1% of global commercial ship production, while China accounted for approximately half.
In August 2026, President Trump also issued a presidential memorandum aimed at rebuilding the U.S. Navy and strengthening the U.S. shipbuilding industrial base. The core focus was on restoring the production capacity, workforce, and supply chains of U.S. shipyards. It is precisely in this area that South Korea’s role becomes critical.
South Korea possesses world-class capabilities in commercial shipbuilding, as well as expertise in shipbuilding equipment, ship finance, production management, and automation technologies. While the United States has a vast market, substantial financial and technological capabilities, and significant maritime security requirements, it faces structural challenges in its shipbuilding production base and workforce. Combining South Korea’s shipbuilding capabilities with U.S. market access and national security requirements could therefore create new opportunities for both countries.
In fact, in the 2025 agreement between the South Korean and U.S. leaders, the White House welcomed South Korea’s expanded investment in U.S. shipyards and the U.S. workforce, while explicitly outlining bilateral cooperation in areas such as shipyard modernization, maintenance, repair, and overhaul (MRO), workforce development, and supply chain resilience. This demonstrates that investment in the United States goes beyond factory construction or financial investment alone; it is part of a broader process of building the substantive foundation of a South Korea-U.S. industrial alliance.
New U.S.-Korea Economic Security Cooperation Begins in Texas
The first strategic investment project announced by the South Korean and U.S. governments on October 1, 2026, demonstrates that this shift is already becoming a reality. The two countries agreed to pursue “Project Star” as the first South Korea-U.S. strategic investment project, involving the construction and operation of a gas-fired combined-cycle power plant with a total capacity of 6,472 MW and a total investment of $22.3 billion in the Encinitas area of Texas. The power plant will supply electricity directly to nearby AI data centers, with commercial operation of Phase 1 scheduled to begin in 2029 and full-scale operations targeted for 2032.
What is noteworthy is that this project is not merely a power plant construction project. As the AI industry expands, electricity demand from data centers is increasing rapidly. Ultimately, competitiveness in AI depends not only on GPUs and algorithms but also on the ability to secure a stable and sufficient power supply. South Korea has extensive experience operating large-scale manufacturing facilities in industries such as semiconductors, batteries, automobiles, and electronics, as well as competitive capabilities in power-generation equipment and electrical materials. The United States, meanwhile, possesses the world’s largest AI industry and a massive data center market.
The Texas project is an example of combining the strengths of both countries. The South Korean government stated that, in reviewing the project’s feasibility, it comprehensively considered factors such as increased electricity demand resulting from expanded data center investment in Texas, projected electricity prices, and the business capabilities of participating companies. It also completed the deliberation and approval processes of the Project Management Committee and the Operations Committee, as well as the reporting procedures to the National Assembly, in accordance with domestic law.
Even more important are the opportunities for South Korean companies to participate. The plan aims to expand the participation of Korean companies throughout the entire project lifecycle—including power-generation equipment, engineering and construction, and long-term operation and maintenance—and the U.S. side has expressed its intention to provide opportunities for Korean-made equipment, including turbines, to be supplied to other projects in the United States in the future. Therefore, South Korea’s investment in the United States is not merely a matter of committing capital and stopping there; it has the potential to serve as a platform for Korean companies to expand their presence in the U.S. market.
Nuclear Power Cooperation Could Become a New Symbol of the South Korea-U.S. Technology Alliance
Cooperation in the nuclear power sector is also a key example illustrating the qualitative transformation in U.S.-Korea relations. South Korea and the United States have agreed on a “U.S.-Korea Nuclear Power Framework” that would utilize up to $120 billion from the U.S.-Korea Strategic Investment Fund to support the construction of eight large-scale nuclear power plants in the United States and establish a framework for nuclear cooperation between companies from both countries. This includes two units of the Korean APR1400 and six units of Westinghouse’s AP1000. However, the South Korean government maintains that final decisions on individual nuclear power projects will be made only after specific details—including site selection, project structure, and construction schedules—have been finalized, commercial viability has been assessed, and domestic procedures have been completed.
This cooperation holds significant symbolic value. Korea’s first nuclear power plant, Kori Unit 1, was built in 1978 using Westinghouse technology. Now, some 50 years later, a framework has been established for South Korean companies to build nuclear power plants in the United States alongside Westinghouse. Furthermore, the participation of the Korean-designed APR1400 in U.S. nuclear power projects could provide an opportunity to enhance the international standing of South Korea’s nuclear power industry. Successful execution of projects in the U.S. market could also provide a foundation for South Korean and U.S. companies to jointly enter third-country markets, including Europe and the Middle East. The South Korean government also anticipates these potential benefits.
In particular, U.S. electricity demand is likely to increase as AI data centers and advanced manufacturing expand.
As the role of nuclear power in ensuring a stable and reliable electricity supply grows, combining South Korea’s experience in nuclear power plant construction and operation with U.S. technology and market access could contribute to the development of an integrated supply chain for the nuclear power industries of both countries. This goes beyond conventional energy cooperation.
The nuclear power industry is a comprehensive sector that connects numerous industries, including key equipment, engineering and design, construction, operations, fuel, safety management, and finance. Therefore, as nuclear power cooperation expands, industrial, technological, and human capital exchanges between South Korea and the United States are also likely to expand.
Alaska LNG: New Possibilities for Energy Security Cooperation
The Alaska LNG project is another example of the potential for South Korea-U.S. economic security cooperation. However, it is important to clarify the facts surrounding this matter. On September 30, 2026, President Trump announced a project package worth approximately $200 billion at the White House in connection with South Korea’s strategic investments in the United States, which included the Alaska LNG pipeline project. President Trump mentioned eight large-scale nuclear power plants, a gas-fired power plant in Texas, and the Alaska LNG project.
However, the South Korean government made clear that investment in the Alaska LNG project had not been finalized at that time and that its feasibility and legal requirements remained subject to review. President Lee Jae-myung also stated that LNG and nuclear power projects could proceed only after their commercial viability had been confirmed. These differences should be viewed not as a problem in U.S.-South Korea relations but rather as part of the normal negotiation and due-diligence process for large-scale international projects.
In fact, in the plan announced by the South Korean government on October 1, the Alaska LNG project was designated as “Project North” and remains under review. A decision on whether to proceed with the project will be made only after it satisfies the commercial viability requirements of the U.S.-South Korea Strategic Investment MOU and complies with applicable domestic legal requirements.
More important, however, are the mutual benefits that could be realized if the project moves forward. The U.S. side has agreed to improve conditions for the participation of South Korean equipment manufacturers and suppliers, secure long-term LNG purchase contracts on economically viable terms, and provide South Korea with priority access to LNG produced in Alaska. From South Korea’s perspective, this presents an opportunity to strengthen energy security by diversifying its LNG supply sources.
The United States can also secure South Korea as a stable long-term energy market. Ultimately, LNG cooperation represents the convergence of two objectives: expanding U.S. energy exports and diversifying South Korea’s energy supply chain.
Why “Investment” Leads to a “Supply Chain Alliance”
One of the most significant long-term impacts of South Korean investment in the United States on U.S.-South Korea relations is the deepening of supply chain interdependence. In the past, economic relations between countries were primarily shaped by the exchange of goods. However, strategic competition between the United States and China, supply chain disruptions following the COVID-19 pandemic, the Russia-Ukraine war, competition for critical minerals, and competition in semiconductor and AI technologies have rapidly blurred the lines between economics and national security. National security is no longer determined by military power alone.
Whether a country can secure a stable supply of semiconductors, obtain the critical minerals required for batteries, operate its power grid and energy infrastructure reliably, ensure sufficient electricity to support AI data centers, and maintain stable production of ships and defense-related materials—all of these capabilities have become integral to national security.
If the United States and South Korea connect their respective production bases and technological capabilities in these areas, they can establish supply chain structures in which each country can help compensate for vulnerabilities or disruptions affecting the other.
In the 2025 agreement between the South Korean and U.S. leaders, both countries confirmed that strengthening the link between economic security and national security and maintaining resilient supply chains are critical to their respective competitiveness. The expansion of cooperation beyond shipbuilding and energy to include semiconductors, pharmaceuticals, critical minerals, AI, and quantum computing also reflects this shift.
An Opportunity for Korean Companies to Move Beyond the U.S. Market into the “Global Market”
Another positive effect of investment in the United States is that it strengthens the foothold of Korean companies in the U.S. market. When Korean companies operate production facilities in the United States, hire local workers, and undertake joint projects with U.S. firms, the ties between Korean companies and U.S. industries become deeper and more durable. This creates a more sustainable economic relationship than trade based solely on exports.
For example, when a Korean shipbuilding company invests in a U.S. shipyard, the expertise of the U.S. shipbuilding workforce can be combined with Korean shipbuilding technology. When a Korean power-generation equipment company participates in a U.S. power-generation project, the U.S. electricity market becomes linked to Korea’s manufacturing supply chain. When a Korean nuclear power company participates in a U.S. nuclear power project, the technological, equipment, human capital, and financial ecosystems of both countries can operate in tandem. Furthermore, these experiences can facilitate entry into third-country markets.
Korean technologies and companies that establish a successful track record in the United States may find it easier to compete in other markets, including Europe, the Middle East, and Southeast Asia. In particular, nuclear power, shipbuilding, and energy infrastructure are industries characterized by large-scale projects in which international credibility is critical. Therefore, when Korean and U.S. companies jointly establish successful projects in the U.S. market, those achievements can function as a new export platform for Korean companies.
In the AI Era, “Semiconductors + Power + Data Centers” Collaboration Is Key
When discussing the future of U.S.-Korea economic cooperation, AI cannot be overlooked. The United States possesses global competitiveness in AI models, software, semiconductor design, and platforms. South Korea possesses large-scale advanced manufacturing capabilities in areas such as memory semiconductors, manufacturing, power electronics, displays, and batteries. Cooperation between companies in both countries is already expanding, particularly in AI semiconductors and data centers.
If Korean companies’ investments in the United States connect AI data centers, power infrastructure, and semiconductor manufacturing facilities, Korea-U.S. technology cooperation can advance to a new level. The recent Texas project is a prime example. The fact that the power plant is designed to supply electricity directly to AI data centers demonstrates that the AI and energy sectors can no longer be treated as separate industries. The South Korean government has also characterized this project as a new model of economic security cooperation linking AI and energy infrastructure.
Going forward, cooperation between South Korea and the United States needs to evolve beyond a simple combination of “the United States, which develops AI technologies,” and “South Korea, which possesses advanced manufacturing capabilities,” toward an integrated ecosystem connecting AI computing, semiconductors, power, data centers, and communications networks. If the two countries expand the scope of cooperation to include joint research and development (R&D), personnel exchanges, AI safety, 6G, quantum technologies, biotechnology, and space, the quality and strategic value of their economic cooperation could be elevated to a new level.
Shipbuilding Cooperation: The Link Between Economic and Security Alliances
Among investments in the United States, shipbuilding cooperation is particularly important when considering the future of the U.S.-Korea alliance. This is because the shipbuilding industry connects the commercial and military sectors. Strengthening the foundation of the U.S. shipbuilding industry would affect both U.S. commercial shipbuilding capacity and naval ship production. U.S. maritime transportation capabilities and naval power are directly linked to the Indo-Pacific Strategy. South Korea already possesses world-class shipbuilding capabilities, while the United States is seeking to strengthen its maritime security capabilities.
For this reason, ROK-U.S. shipbuilding cooperation goes beyond simply building ships together. Jointly advancing the modernization, automation, and digitization of U.S. shipyards, as well as MRO, workforce development, and supply chain resilience, can strengthen the U.S. industrial base while expanding South Korean shipbuilding companies’ access to the U.S. market. In fact, when the Trump administration announced South Korean companies’ investment plans for the U.S. shipbuilding industry in 2025, it highlighted a $5 billion shipyard modernization program involving HD Hyundai and U.S. firms, MRO cooperation between Samsung Heavy Industries and U.S. companies, and Hanwha Ocean’s investment plan for a shipyard in Philadelphia.
This has the potential to become a leading area in which economic and military security converge within the future U.S.-South Korea alliance.
The Key to Investment in the U.S. Is Not “How Much” but “How” to Invest
Large-scale investments always entail risks. In particular, projects requiring significant upfront investment and rigorous profitability assessments—such as the Alaska LNG project—or projects with long construction periods and potential fluctuations in permitting and construction costs—such as nuclear power plants—require rigorous feasibility assessments. This is why the South Korean government emphasizes “commercial rationality.”
The Korea-U.S. Strategic Investment Special Act is based on the principle that investments in the United States must be pursued in a manner consistent with the national interest—including the development of the national economy and the strengthening of industrial competitiveness—and establishes an annual investment limit of $20 billion. Furthermore, it includes safeguards requiring certain parliamentary oversight procedures even under unavoidable circumstances, such as national security concerns or supply chain disruptions. These principles are being fully applied to the follow-up projects announced on October 1.
South Korea and the United States will manage all strategic investment projects through an umbrella Investment Special Purpose Vehicle (I-SPV) and project-specific P-SPVs, and have established a risk-sharing mechanism that maintains a 50-50 profit-sharing ratio between the two countries until South Korea recovers the principal and interest on its total investment. Furthermore, the annual strategic investment cap of $20 billion, totaling $200 billion, is specified in a legally binding operating agreement, and provisions allow for renegotiation of the business plan, budget, and profit-sharing ratio if a project’s viability is materially compromised. The South Korean side has also been guaranteed the right to receive project-related information and approve major matters.
This demonstrates that investment in the United States is not designed as an unconditional provision of capital, but rather as an investment framework that takes both commercial viability and national interests into account.
The Intersection of Trump’s “America First” Policy and South Korea’s “National Interest-Centered Pragmatic Diplomacy”
The Trump administration’s foreign economic policy has distinct characteristics. It is an approach that prioritizes U.S. economic interests, including expanding domestic manufacturing, creating jobs, increasing energy production, localizing supply chains, and rebuilding the shipbuilding industry. Conversely, the South Korean government is also cooperating with the United States while prioritizing national interests and economic benefits. The policy objectives of the two countries do not need to be identical. Rather, the key to strengthening the economic sustainability of the alliance lies in two countries with different priorities identifying areas where mutual benefits can be realized.
The United States needs South Korea’s capital, technology, and manufacturing capabilities. South Korea needs the U.S. market, core technologies, energy and critical resources, as well as U.S. financial and global networks.
It is precisely this interdependence that lies at the heart of U.S.-South Korea economic cooperation. This is why President Trump emphasizes investment in the United States as a means of strengthening U.S. competitiveness in manufacturing, energy, and technology. The White House has consistently explained that economic cooperation with South Korea helps strengthen U.S. employment, manufacturing, energy, and technological competitiveness.
From South Korea’s perspective, as Korean companies’ production and investment in the U.S. market increase, local networks are strengthened, and the foundation for representing the interests of South Korean companies and industries in U.S. policymaking processes is broadened. The deeper the economic interdependence becomes, the greater the incentive for both countries to recognize each other as strategic partners.
Investment in the U.S. Builds “Relational Assets” for the ROK-U.S. Alliance
An alliance is not sustained by treaties alone. What underpins an alliance is not only military trust but also economic interests, industrial ties, people-to-people exchanges, technological cooperation, and shared strategic objectives. When Korean companies operate production facilities across the United States and employ American workers, new ties of mutual interest are forged between local communities and Korea. U.S. companies, in turn, gain deeper access to the Korean market and technology ecosystem through collaboration with Korean firms. As these relationships accumulate, the ROK-U.S. alliance can evolve beyond diplomacy between central governments into a multilayered network involving businesses, state governments, local governments, universities, research institutions, and local communities.
Korean companies’ local corporate social responsibility initiatives, workforce development programs, joint research with universities and research institutions, and cooperation with local governments will also serve as important factors in strengthening these relationships. Ultimately, investment in the United States can become a process of accumulating not only economic capital but also the social and political relational capital of the U.S.-Korea alliance.
The U.S.-Korea Alliance: From a “Security Alliance” to a “Technology, Industry, and Security Alliance”
In today’s strategic competition among nations, military power, economic power, and technological capability are inseparable. Semiconductors are a matter of national security, AI is a matter of national security, and critical minerals and energy supply chains have become matters of national security.
The shipbuilding industry is also an economic sector that is directly linked to maritime security. In this environment, the ROK-U.S. alliance must also evolve. South Korea’s investment in the United States can serve as a concrete means of facilitating this transformation. In the shipbuilding sector, it is possible to restore the U.S. industrial base while expanding the presence of South Korean shipbuilding technology and companies in the U.S. market.
In the energy sector, it is possible to connect U.S. LNG and power infrastructure with South Korea’s equipment, engineering, construction, and operational capabilities. In the nuclear power sector, U.S. technology and market access can be combined with South Korea’s construction and supply chain capabilities.
In the AI sector, U.S. core technologies and platform capabilities can be linked with South Korea’s semiconductor and manufacturing capabilities. In the critical minerals sector, both countries can reduce excessive dependence on individual countries, including China, and establish more resilient supply chains. Accordingly, investment in the United States holds greater strategic significance when these projects are interconnected rather than pursued independently.
Three Conditions for a Sustainable U.S.-Korea Alliance
However, for investment in the United States to have a positive impact on U.S.-Korea relations, three principles are crucial.
First, both commercial rationality and national interests must be secured. A project is not necessarily a sound investment simply because it is large-scale. A comprehensive review must be conducted, taking into account the project’s profitability, risks, potential return on investment, the degree of participation by Korean companies, and its broader effects on domestic industries.
Second, the substantive participation of Korean companies must be guaranteed. The benefits of investment in the United States should not be limited to the accumulation of assets in the United States alone. Korean companies must be able to participate in areas such as equipment supply, engineering and construction, operations and maintenance, finance, and technology development in order to secure new business opportunities in the U.S. market.
Third, investment must be linked to diplomacy and technological cooperation. If investments in the United States are used to expand joint R&D, personnel exchanges, standards cooperation, joint development of critical minerals, supply chain early-warning systems, and cooperation in AI and quantum technologies, the impact of these investments could be significantly greater. If these three conditions are met, what will matter more than the $350 billion figure itself is the long-term industrial ecosystem between South Korea and the United States that will be created through these investments.
Conclusion: From an “Alliance That Invests Money” to an “Alliance That Builds the Future Together”
Over the past 70-plus years, the U.S.-Korea alliance has evolved from a security alliance to an economic alliance and then to a comprehensive strategic alliance. Now, a new phase is beginning. South Korea’s strategic investment in the United States strengthens American manufacturing, energy, shipbuilding, nuclear power, and AI infrastructure, while simultaneously providing opportunities for Korean companies to enter the U.S. market and expand their global competitiveness. What the United States needs is not simply South Korean capital. South Korea’s manufacturing capabilities and supply chain management expertise—accumulated in sectors such as shipbuilding, nuclear power, semiconductors, batteries, and power equipment—are also critical assets.
What South Korea needs, too, is not simply access to the U.S. market. Integrating with U.S. cutting-edge technologies, energy and critical resources, global financial markets, and the R&D ecosystem is crucial to the next stage of growth for South Korean industries. If this mutual complementarity takes effect, investment in the United States can evolve into a structure that benefits both countries. As the Trump administration seeks to rebuild U.S. manufacturing and strengthen the energy and shipbuilding industries, if South Korea provides large-scale investment and industrial cooperation, and if the South Korean government manages these projects on the basis of commercial rationality and investor protection, the policy objectives of both countries can find significant common ground.
In particular, the Texas AI power project announced on October 1, the U.S.-Korea nuclear power framework, and the review of the Alaska LNG project demonstrate that these changes are moving beyond declarations toward concrete projects. Of course, it cannot be assumed that all projects will achieve the same level of success. Some projects, such as the Alaska LNG project, require further review of their commercial viability, while others, such as nuclear power, must undergo lengthy feasibility assessments and legal procedures. However, if both countries faithfully follow these procedures while connecting the industrial capabilities each country needs from the other, investment in the United States can serve as a foundation for making the U.S.-Korea relationship more stable and structurally integrated.
The future of the U.S.-Korea alliance can no longer be defined by military power alone.
It must evolve into a relationship in which the two countries jointly develop technologies, build resilient supply chains, secure energy, and shape the future of industry together.
In that sense, South Korea’s strategic investment in the United States is not merely an overseas investment. It has the potential to become a new economic, technological, and security platform that transforms the ROK-U.S. alliance from an “alliance that defends” into an “alliance that grows together,” and ultimately into an “alliance that shapes the future together.”