Allied Manufacturing

Allied manufacturing is the investment side of supply-chain realignment. As the US and China pull apart, production and sourcing shift toward trusted partners, a pattern often called friend-shoring. This pillar starts with South Korea, a core node in that shift, and the policy and capital now flowing to the Korean firms that make what the US needs.

Key takeaways
  • Allied manufacturing is the investment side of supply-chain realignment: as the US and China decouple, production and sourcing shift toward trusted partners, a pattern often called friend-shoring.
  • South Korea is a core node in that shift, supplying critical goods the US cannot quickly make at home, from AI memory and batteries to ships, defense gear, and large power transformers.
  • The dollars are committed: at the October 2025 Lee-Trump summit, Korea pledged $350 billion of US investment, including $150 billion for shipbuilding under the 'MASGA' initiative, and Korean battery makers earn US IRA production credits.
  • Shipbuilding anchors the alliance: China's naval shipbuilding capacity is estimated at more than 230 times that of the United States (CSIS), and Korea is the only allied industrial base big enough to close part of that gap.
  • This pillar starts with the Korea Manufacturing Core Alliance concept and the friend-shoring policy logic behind it.

What is allied manufacturing?

When supply chains were built purely for cost, they ran through China. When they are rebuilt for security, they run through allies. That is friend-shoring: sourcing critical goods from trusted partners rather than rivals. The logic was set out by the US Treasury itself.

Favoring the friendshoring of supply chains to a large number of trusted countries.

— Janet Yellen, via CNBC

For an investor it points to a specific set of beneficiaries: the manufacturers in allied countries that pick up the orders and the factory investment as production moves.

Why is South Korea central to allied manufacturing?

Because Korea already makes the hard things. SK Hynix held about 62% of the high-bandwidth memory market in mid-2025, down from roughly 70% at the start of the year (Counterpoint Research), and is the dominant supplier of HBM to Nvidia, the scarce component behind every AI accelerator (TrendForce). Korean firms are also a swing supplier of the large power transformers an aging US grid needs, where some 70% of units are 25 years or older; Korean ultra-high-voltage transformer exports to the US topped 1 trillion won in 2025 (KED Global). Add batteries, ships, and defense, and Korea covers six strategic sectors at once.

The capital is committed, not hypothetical. At the October 2025 Lee-Trump summit, Korea agreed to invest $350 billion in the United States, split into about $200 billion in cash installments and $150 billion for shipbuilding under the “MASGA” plan (Korea Economic Institute of America; The Korea Herald). The deal was struck alongside a lower US tariff rate for Korean goods, which ties the industrial alliance directly to trade policy. On batteries, US IRA production credits worth $35 per kWh for cells plus $10 for modules can make Korean output cost-competitive on American soil (Benchmark Mineral Intelligence).

Why does shipbuilding anchor the alliance?

Ships are where the US gap is widest and the ally matters most. Chinese shipbuilders now produce over 50% of all merchant tonnage globally, up from about 5% in 1999, while Japan and Korea’s combined share has slipped to roughly 40%; by one unclassified US Navy estimate, China’s naval shipbuilding capacity is more than 230 times that of the United States (CSIS). Korea is the only allied industrial base big enough to close part of that gap, which is why $150 billion of the package is earmarked for US yards. The work has already started: in March 2025 Hanwha Ocean completed the first large-scale maintenance of a US Navy support ship at a Korean yard, the USNS Wally Schirra (USNI News), and it now owns the Philadelphia shipyard.

How do the Allied Manufacturing clusters fit together?

The hub of this pillar is the Korea Manufacturing Core Alliance concept, and its securities map the six sectors one by one. AI memory runs through SK Hynix and Samsung Electronics, which adds DRAM, NAND, and foundry capacity, with Hanmi Semiconductor supplying the bonders that stack HBM; together they are the chips and tools behind every AI cluster. Batteries pair LG Energy Solution and Samsung SDI, the anchors of a non-Chinese cell supply chain that also leads the batteries and energy storage theme. Shipbuilding pairs Hanwha Ocean and HD Hyundai Heavy Industries. Defense runs through Hanwha Aerospace and Hyundai Rotem, whose export cycle the Korea defense industry concept covers in depth; Korean arms exports hit a record of about $4.05 billion in 2024, roughly ten times the 2015 level (The Korea Herald). The grid leg is HD Hyundai Electric, the transformer maker riding the US replacement wave, alongside Korea’s nuclear push, where a Korean consortium signed an $18 billion deal for APR-1400 reactors in the Czech Republic (The Korea Herald). Robotics, via Rainbow Robotics, is the layer that lets reshored plants run with scarce labor and links this pillar to the robotics and physical AI theme.

Explore this theme

Which concepts explain this theme?

Which companies validate the thesis?

Which terms need disambiguation?

How can investors access Allied Manufacturing?

The Korea Manufacturing Core Alliance concept covers the Korean leaders across AI memory, batteries, shipbuilding, defense, the power grid, and robotics. The Akros Korea Manufacturing Core Alliance Index tracks the theme.

These references describe index-tracking relationships as a matter of fact and are not a recommendation to buy any product. Akros, as the index provider, may receive licensing fees from product sponsors. Review the product's prospectus before investing.

What are the risks of Allied Manufacturing?

This is a policy trade, and policy is the main risk. Tariff terms, the pace of the $350 billion package, and US-Korea politics can all shift the timeline; Seoul itself has flagged that the fund talks could slip over currency-outflow concerns (KED Global). Several names depend on a single large customer or program. Korean industrials are also cyclical and export-geared, so a global slowdown hits them early, and returns ride the Korean won. The structural case is strong; the path is bumpy.

Frequently asked questions

What is allied manufacturing?

Allied manufacturing is the reorganization of supply chains toward trusted partner countries instead of geopolitical rivals, often called friend-shoring. For investors it means owning the manufacturers in allied countries that gain orders and investment as production moves out of China.

Why is South Korea central to supply-chain realignment?

Korea makes things the US needs and cannot quickly replace at home: SK Hynix is the dominant supplier of high-bandwidth memory to Nvidia, set to provide about two-thirds of Nvidia's next-generation HBM4 in 2026 (TrendForce), and Korean firms are a marginal supplier of large power transformers to an aging US grid (KED Global).

What policy and money back the allied-manufacturing thesis?

Korea pledged $350 billion of US investment, including $150 billion for shipbuilding under the 'MASGA' initiative (The Korea Herald), and Korean battery makers earn US IRA production credits that can make domestic output cost-competitive (Benchmark Mineral Intelligence).

What is MASGA and why does shipbuilding anchor the alliance?

MASGA ('Make American Shipbuilding Great Again') is the $150 billion shipbuilding portion of Korea's $350 billion US investment pledge (The Korea Herald). It targets the widest US industrial gap: China's naval shipbuilding capacity is estimated at more than 230 times that of the United States (CSIS), and in March 2025 Hanwha Ocean completed the first large-scale maintenance of a US Navy support ship at a Korean yard (USNI News).

How can you invest in allied manufacturing?

The Korea Manufacturing Core Alliance concept covers the Korean leaders across six strategic sectors. The Akros Korea Manufacturing Core Alliance Index tracks the theme. As always, check fees, holdings, and risk before investing.

Sources & references

  1. Global DRAM and HBM Market Share: Quarterly · Counterpoint Research, 2026-06-08
  2. SK hynix Reportedly to Supply About Two-Thirds of NVIDIA HBM4; Samsung Targets Early Delivery · TrendForce, 2026-01-28
  3. Korea sails into US shipbuilding with $150b MASGA push · The Korea Herald, 2025-08-26
  4. Yellen says the U.S. and its allies should use 'friend-shoring' · CNBC, 2022-07-19
  5. US battery production could beat China on cost due to IRA tax credits · Benchmark Mineral Intelligence, 2025-04-01
  6. U.S., South Korea Move to Lock In Lower Tariff Rate with $350 Billion Deal · Korea Economic Institute of America, 2025-10-30
  7. S.Korea's power transformer exports soar as global supply shortage bites · KED Global, 2025-06-16
  8. The Threat of China's Shipbuilding Empire · Center for Strategic and International Studies (CSIS), 2024-05-10
  9. Navy Supply Ship Completes First Large-Scale Maintenance at South Korean Shipyard · USNI News, 2025-03-13
  10. Amid global tensions, Korea's arms exports hit all-time high · The Korea Herald, 2025-02-01
  11. Korea inks $18b nuclear export deal with Czech Republic · The Korea Herald, 2025-06-05
  12. Seoul warns MASGA project at risk as $350 bn fund talks with Washington stall · KED Global, 2025-09-09