South Korea and the United States are discussing semiconductor investments in the U.S. as part of broader bilateral negotiations, a Seoul presidential official said Friday, as Washington prepares a targeted tariff policy for imported chips that could affect two of Asia’s largest memory-chip manufacturers.

The discussions come as the administration of U.S. President Donald Trump seeks to encourage more semiconductor production on American soil while negotiating the terms of a broader investment and trade agreement with Seoul.

Asked whether planned U.S. tariffs on semiconductor imports were affecting South Korea’s investment negotiations with Washington, the official said the various issues under discussion were interconnected.

“There are various issues between South Korea and the United States, and they are sometimes affecting each other,” the official said, adding that semiconductors were among the investment-related matters being negotiated.

“We are making efforts to prevent them from hindering each other,” the official said.

The development highlights a delicate balancing act for Seoul. South Korea is seeking to protect the competitiveness of its semiconductor exporters while also encouraging its companies to expand manufacturing and investment in the United States.

U.S. Commerce Secretary Howard Lutnick said this week that Washington was preparing a “targeted, thoughtful tariff policy” for semiconductor imports, signaling that foreign chipmakers could face higher costs for accessing the U.S. market unless they expand domestic production.

“If you don’t build here, expect to pay to enter the greatest market in the world,” Lutnick said in a televised interview.

The threat comes as Washington attempts to reshape global semiconductor supply chains and reduce reliance on overseas manufacturing for strategically important technologies.

South Korea is particularly exposed because Samsung Electronics and SK Hynix are among the world’s largest semiconductor companies and major suppliers of memory chips used in servers, smartphones and artificial intelligence infrastructure.

Demand for high-bandwidth memory and other advanced memory products has surged as U.S. technology companies spend heavily on data centers and AI computing systems.

$350 Billion Investment Deal at Stake

The semiconductor discussions are linked to a broader agreement under which South Korea committed to $350 billion of investment in U.S. manufacturing.

Under the agreement reached by the two countries’ presidents last year, South Korean chipmakers are to receive U.S. tariff rates “no less favorable” than those offered to another competitor with an equal or larger volume of chip trade.

That provision could become important if Washington introduces new semiconductor tariffs.

The language gives Seoul a basis for seeking preferential treatment for Samsung and SK Hynix, particularly if competing semiconductor producers receive more favorable terms because of larger U.S. production footprints or investment commitments.

For Washington, however, the investment pledge provides an additional lever. The prospect of tariffs can be used to encourage South Korean manufacturers to accelerate the construction of factories and other semiconductor infrastructure in the United States.

The outcome could therefore determine not only the tariff burden facing Korean chip exports but also where the next generation of semiconductor manufacturing capacity is built.

The stakes are high because memory chips have become a critical bottleneck in the global AI infrastructure build-out. Advanced AI accelerators require large quantities of high-performance memory, especially high-bandwidth memory, to process the enormous volumes of data involved in training and running increasingly sophisticated models.

Samsung and SK Hynix are major suppliers to the AI industry, making their investment and production decisions strategically important to both Seoul and Washington.

For South Korean companies, shifting more production to the U.S. could reduce exposure to future trade barriers and strengthen access to American customers. But building semiconductor facilities in the United States is substantially more expensive than manufacturing in established Asian production hubs. Companies therefore need sufficient incentives, predictable tariff treatment and confidence that demand will justify the additional capital expenditure.

Industry analysts say it will create a negotiating space between Seoul’s desire to protect its exporters and Washington’s objective of bringing more semiconductor production inside the United States.

The semiconductor negotiations are taking place alongside unresolved national-security discussions. The South Korean official said talks with Washington on security issues had not been making progress, referring to Seoul’s plans to build a nuclear-powered submarine as part of last year’s agreement.

The lack of movement is an indication of how closely trade, investment and security issues have become intertwined in the U.S.-South Korea relationship. Washington wants stronger supply-chain resilience and greater domestic production of strategic technologies, while Seoul is seeking continued access to the U.S. market and favorable treatment for its companies as they expand their American operations.

The challenge for South Korea is to secure protection from potentially damaging semiconductor tariffs without committing its companies to investments that weaken their global cost competitiveness. For the United States, the objective is broader: use market access and trade policy to attract factories, technology, and capital while reducing dependence on foreign semiconductor supply chains.

Norway’s $2.3 trillion sovereign wealth fund has proposed a significant reduction in its allocation to government bonds, with U.S. Treasurys set to bear much of the cut, as the world’s largest sovereign investor seeks to diversify its portfolio, limit concentration risks and improve long-term returns.

The heads of Norges Bank Investment Management (NBIM), which manages the fund, recommended in a letter to Norway’s Finance Ministry made public Friday that the government bond component of its fixed-income portfolio be reduced from 70% to 50%.

NBIM said a 50% allocation would still provide sufficient liquidity during periods of severe market stress while giving the fund greater scope to invest in assets offering higher returns. Under the proposed changes, the fund’s allocation to U.S. Treasurys would fall from 34.1% to 21.9%, while its euro-area government bond allocation would decline from 16.8% to 14.1%. Its holdings of Japanese government bonds, meanwhile, would rise to 7.4% from 4.6%.

The proposal comes at a particularly sensitive moment for the U.S. government bond market, where long-dated Treasury yields have climbed to decade-high levels as investors reassess the sustainability of U.S. fiscal policy, rising government debt and the ability of traditional buyers to absorb the growing supply of Treasurys.

The move by Norway’s fund does not amount to a wholesale retreat from U.S. fixed income. Instead, NBIM plans to redirect a substantial portion of its bond allocation toward nongovernment securities, including corporate debt and mortgage-backed securities.

Its allocation to nongovernment U.S. fixed income would rise to 27.6% from 16.2%.

Mohamed El-Erian, the economist and Allianz chief economic adviser, said Friday that the significance of the Norwegian fund’s decision extends beyond the amount of Treasurys it may ultimately sell.

“Reliable buyers and holders of U.S. Treasurys are under pressure,” El-Erian told CNBC’s Carolin Roth, pointing to Japan, China and Gulf countries as examples of traditional holders facing changing economic or geopolitical incentives.

Addressing Norway’s proposed reduction in Treasury holdings, El-Erian said: “The size isn’t big, but the signal that traditional holders and buyers are becoming less reliable is a very important one.”

The concern for the Treasury market is therefore less about the immediate impact of one investor and more about what happens if several large foreign holders simultaneously become less willing to increase their exposure to U.S. government debt.

NBIM said its proposed changes are also designed to address a structural problem in the way its government bond portfolio is allocated. The fund wants to move away from weighting sovereign debt primarily according to countries’ gross domestic product and instead use market-value weighting.

The change reflects the fund’s assessment that high debt burdens have become widespread across developed economies, making GDP-based allocations difficult to justify from a portfolio-risk perspective.

NBIM chief executive Nicolai Tangen and Norges Bank Governor Ida Wolden Bache also argued that the fund could capture higher risk premiums by expanding into assets such as mortgage-backed securities.

Mortgage-backed securities, which became synonymous with systemic risk during the 2008 global financial crisis, could offer the Norwegian fund a different risk profile because they have historically tended to behave differently from equities during periods of market stress.

Tangen and Wolden Bache said that characteristic could provide an “additional reduction of volatility,” making mortgage-backed securities more comparable to government bonds in a diversified portfolio than conventional corporate bonds.

Analysts see the strategy as a reflection of the unusual position occupied by Norway’s sovereign wealth fund. Because it invests with a very long time horizon and does not face the same liquidity requirements as many private investors, NBIM can tolerate some assets that may be less liquid or more volatile in normal markets in exchange for potentially higher long-term returns.

The fund currently holds about $1.65 trillion in equities and $592 billion in fixed-income assets. Its equity portfolio gives it ownership of almost 1.5% of all listed companies globally, making NBIM one of the most influential institutional investors in international markets.

Established in 1998 to invest Norway’s oil and gas revenues, the fund was designed with strict investment rules intended to preserve the wealth generated from the country’s natural resources for future generations.

Its enormous equity exposure has benefited from the powerful rally in U.S. and Asian technology stocks and companies positioned to profit from the artificial intelligence investment boom. Those gains, however, have also increased the fund’s exposure to a potential reversal in some of the market’s most crowded trades.

Tangen has repeatedly warned that the extraordinary returns generated by technology and AI-related assets should not be expected to continue indefinitely.

That vulnerability was demonstrated in the first quarter of 2025, when the fund recorded a loss of about $40 billion as investors rapidly reduced exposure to riskier assets. NBIM’s own stress testing also highlights the scale of the risk. A severe correction in artificial-intelligence-related assets could reduce the value of the fund by an estimated $740 billion, equivalent to about 35% of its portfolio.

Against that backdrop, the proposed bond reallocation represents more than a tactical adjustment to government debt. It is largely seen as part of a broader attempt to build a portfolio capable of absorbing large shocks while reducing reliance on any single asset class or sovereign issuer.

For the U.S. Treasury market, however, the decision comes with an important message. The world’s largest pools of capital are becoming more sensitive to the combination of elevated government debt, increased bond issuance and changing risk-return calculations.

Norway’s fund is not proposing to abandon Treasurys, which remain among the world’s most liquid and important safe-haven assets. But its decision to reduce their weight while increasing exposure to other forms of fixed income illustrates how even the most conservative institutional investors are reassessing the role of government bonds in a world of higher debt and potentially higher long-term yields.

The implication for Washington is significant because as public debt and Treasury issuance expand, the government may have to compete for capital with corporate borrowers and other assets offering investors higher returns. That could keep pressure on long-term borrowing costs even if inflation and short-term interest rates eventually moderate, making the Treasury market increasingly sensitive not only to Federal Reserve policy but also to the portfolio decisions of the world’s largest institutional investors.

Igor Sechin, chief executive of Russia’s largest oil producer Rosneft and one of President Vladimir Putin’s most influential energy allies, said China has taken on a greater role in stabilizing global oil markets by sharply reducing its crude imports this year, arguing that Beijing’s influence is increasingly rivaling that of OPEC.

Speaking Thursday at a Russian-Chinese business forum in Vladivostok, Sechin said China had reduced its oil imports by 5.5 million barrels per day this year, a decline he said had helped absorb excess supply and stabilize prices without Beijing being part of any formal producers’ cartel.

“This year, China has effectively taken the lead from OPEC and, without being a member of any cartel, has managed to stabilize the global oil market by cutting its oil imports by 5.5 million barrels per day,” Sechin said.

The comments reflect Sechin’s long-standing skepticism toward OPEC-led production management and his broader argument that the balance of power in global energy markets is shifting toward major consumers with large strategic reserves and growing control over demand.

China is the world’s largest oil importer, making changes in its purchasing patterns highly consequential for producers from Russia and the Middle East to Africa and the Americas. A sustained reduction in Chinese buying can weaken global demand for seaborne crude, increase competition among exporters and put downward pressure on prices.

Sechin said China’s growing strategic petroleum reserves could further increase Beijing’s influence over the international energy market.

“I believe that further growth in China’s reserves will strengthen China’s role in the energy market, against a backdrop of OPEC’s waning influence and a reduction in the number of its members,” he said.

His argument points to an important change in the traditional structure of the oil market. OPEC and its wider OPEC+ alliance have historically exercised their greatest influence through the supply side, adjusting production to manage prices and prevent severe market imbalances. China, by contrast, can exert influence through the demand side because of the enormous volume of crude required by its refineries and the scale of its strategic inventories.

The development has caught Russia’s attention.

China has become a critical destination for Russian crude following Moscow’s invasion of Ukraine and the subsequent Western sanctions that sharply reduced Russia’s access to European energy markets. Russian producers have consequently become more dependent on Asian buyers, particularly China and India, to sustain export volumes.

The situation has given changes in Chinese purchasing behavior an outsized impact on Russian oil companies. If Chinese refiners reduce imports for an extended period, Russian producers could face greater pressure to discount their crude or redirect cargoes to other markets.

Sechin’s comments also carry a commercial dimension for Rosneft, whose business depends heavily on maintaining access to major Asian markets as Western sanctions continue to constrain Russia’s traditional energy trade.

At the same time, China’s lower imports do not necessarily mean that global oil consumption has fallen by the same amount. Import volumes can fluctuate because of domestic production, refinery maintenance, changes in commercial inventories and the use of crude already held in storage.

China has spent years building strategic and commercial petroleum inventories, giving its refiners greater flexibility over when they purchase crude from international markets. When inventories are high, refiners can reduce imports without necessarily reducing refinery activity immediately. That makes China’s stockpiling strategy an increasingly important variable for oil traders and producers.

Sechin’s assessment also comes as OPEC’s influence faces questions of its own. The producer group and its allies remain capable of affecting global supply through coordinated production policies, but maintaining discipline across a large alliance becomes more difficult when individual members have competing fiscal needs and incentives to maximize output.

The United Arab Emirates announced earlier this year that it would withdraw from OPEC, adding to concerns about the cohesion and future influence of the producer group. The broader issue is whether oil-market power is gradually moving away from a model dominated by producers toward one in which major consumers and their inventories play a greater role.

China’s importance in that transition is difficult to ignore. Its massive refining sector, expanding strategic reserves, and position as the world’s largest crude importer give Beijing several ways to influence the market without formally coordinating production with oil-exporting countries.

For Russia, however, energy experts believe that China’s growing influence presents both an opportunity and a vulnerability. Beijing provides a crucial market for Russian crude and has helped Moscow maintain oil export flows despite Western restrictions. But greater dependence on a single major buyer also leaves Russian producers more exposed to Chinese purchasing decisions and negotiating power.

Sechin’s remarks consequently amount to more than a criticism of OPEC. They reflect the multipolar nature of the global oil market, where the strategic decisions of major consumers can be almost as consequential as coordinated production cuts by exporters.

Analysts have noted that if China’s lower import demand persists and its petroleum reserves continue to expand, Beijing could acquire greater leverage over global crude flows, potentially forcing producers to compete more aggressively for access to the Chinese market. That would represent a significant shift in the traditional balance of the oil industry: OPEC may still control a substantial share of global supply, but China’s purchasing decisions have the power to determine how much crude producers can sell and at what price.