The Peninsula

U.S.-South Korea AI Cooperation and the Future of Work

Late last year, Korean high school students sat for the annual national college entrance exam, Suneung. Acing the exam has represented a predictable trajectory, leading to admission to a prestigious university, entry into a respected profession, and stable lifetime employment. As artificial intelligence (AI) reshapes labor markets, however, the familiar equation linking traditional education to opportunity is becoming less certain.

This uncertainty makes U.S.-Korea cooperation in AI particularly important. An outcome often overlooked in discussions about the recent trade deal and industrial strategy is labor market stability. Joint AI development may be the key to ensuring that the next generation inherits a job market filled with possibilities rather than insecurity.

Controlling the Pace of Technological Change

Job creation and destruction do not occur at an equal rate when new technologies are introduced. Certain industries face abrupt job displacement. In a forthcoming publication in the Journal of Human Capital, my coauthors and I study how the earlier waves of computerization in the United States have transformed the U.S. labor market. We theorize a striking imbalance: While computers lower barriers to entrepreneurship, enabling individuals to start small businesses with limited capital, they also replace routine, low-wage clerical workers at scale. Our empirical findings suggest that the job displacement effect was far larger. The losses in office and administrative employment overshadowed the gains in small-business formation. The same logic applies to AI.

But U.S.-Korea cooperation can reduce the amplitude of these shocks. For instance, NVIDIA’s collaboration with Korea on high bandwidth memory (HBM) technologies helps synchronize the pace of AI diffusion in manufacturing. When firms in both countries adopt advanced tools at a similar rate with coordinated policy guidance, the effects on the labor market can be manifested gradually. The ultimate outcome is a more predictable transition.

Reducing Supply Chain Vulnerability

The foundation of AI, including advanced chips, memory, sensors, and compute capacity, is where the U.S. and Korean supply chains are the most intertwined, including the fact that SK Hynix’s HBM chips are one of the main suppliers for NVIDIA’s graphics processing units (GPUs). AI-driven industrial change indicates that these fundamentals will be the most critical inputs in the supply chain. Deepening AI cooperation leads to stable input markets, which translate into predictable investment and hiring cycles across industries. Hence, stronger AI and semiconductor cooperation make these supply chains less fragile.

The AI and semiconductor industries are highly exposed to geopolitical tensions and national security issues, including Chinese rare-earth restrictions and U.S. export controls on semiconductors. Joint research and development (R&D) centers, deep partnerships in semiconductor collaboration, and integrated AI standards between the United States and Korea can reduce potential disruptions in critical inputs. The reduced geopolitical and economic uncertainty correlates with stable hiring practices and predictable firm behaviors.

U.S.-Korea Technology Prosperity Deal

In October 2025, the United States and Korea signed a memorandum of understanding (MOU), the U.S.-Korea Technology Prosperity Deal, to frame the bilateral technology partnership. This MOU emphasizes shared science and technology capabilities, supply chain resilience, and human capital development. It outlines cooperation across AI adoption, trusted export-technology frameworks, harmonized AI standards, secure supply chains for semiconductors and quantum technologies, and expanded STEM exchange programs. The embedded workforce development and cross-border training in the MOU align with stable input markets, orchestrated technology diffusion, and joint human capital pipelines previously discussed.

Conclusion

As a university professor, I see the uncertainty in the labor market firsthand, as my students in the United States struggle to secure stable employment despite strong academic preparation. Korean students face the same challenges in the age of AI, even after years of preparing for Suneung. The pressures created by rapid technological change are shaping the future of young people in the United States and Korea. This is why the U.S.-Korea Technology Prosperity Deal matters. The MOU provides guidance for aligning science and technology capabilities, which will have a disruptive impact on supply chains, input markets, hiring practices, and investment trajectories. The partnership between the two countries is more important than ever to create a labor market defined by opportunity.

 

Sunhyung Lee is a Non-Resident Fellow at KEI and an Assistant Professor of Economics at the Feliciano School of Business, Montclair State University. The views expressed here are the author’s alone.

Feature image from Shutterstock

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