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Samsung Electronics warns that US tariffs will reach demand for products as the world’s largest memory chip and smartphone manufacturers have presented prospects for this year’s downbeat.
Korean companies said that “increasing policy risks” will increase uncertainty in the chip business, while tariffs will raise prices for smartphone components and put downward pressure on mobile devices.
“The continued uncertainty surrounding US tariff policy continues to pose a potential risk of slowing demand,” said Park, chief financial officer of Soon-Cheol, in a revenue call on Wednesday.
“We believe that changing tariff policies in major economies and stronger export controls (artificial intelligence) have already been added to the expected growing uncertainty of demand in the second half.”
Donald Trump’s suspension of his “mutual tariffs” had encouraged some customers to rise in orders, Samsung said, but the company warned that Front Road could be in demand for “some negative impact” later this year.
The warning came as Samsung’s chip business reported a decline of about 40% in operating profit in the first quarter as sales of high-bandwidth memory chips used in AI hardware hit more tighter US export controls in China.
Analysts estimate that Samsung is generating about a third of HBM sales in China. The impact of export controls outweighed the increase in orders from Chinese customers stocking up memory chips before us.
Most semiconductors are exempt from Trump’s “mutual tariffs,” but the president says he plans to “quickly” impose a mandate on chips. The US is also tightening restrictions on chip makers selling to China after this year’s breakthrough in Chinese AI startups.
Samsung shares fell 0.4% on Wednesday, along with the broader Cospi benchmark. The company’s stocks have fallen by more than 28% a year, as it did not get on the AI boom.
The chipmaker is struggling to keep up with rival SK Hynix, which rose 2% this year in the margin HBM business. Samsung’s advanced HBM chips have yet to pass the certification tests of Nvidia, the leading client of both companies.
Samsung spent WON9TN ($6.3 billion) on research and development in the first quarter, up 16% from a year ago. Due to strong demand for AI servers, we plan to increase production of advanced 12-tier HBM3E chips in the current quarter.
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“The memory cycle appears to have hit a bottom, but the company’s stock is being weighed down due to increasing uncertainty related to tariffs and regulations,” said Albertyoung, managing partner at Petra Capital Management, a Seoul-based hedge fund. “It is unlikely that Samsung’s performance will improve dramatically without HBM sales to NVIDIA.”
The US suspended “mutual tariffs” in dozens of countries, including South Korea and Vietnam, until July, but a minimum of 10% obligation still applies, potentially increasing prices for various home appliances, such as Samsung smartphones and TVs.
Samsung produces almost half of its smartphones in Vietnam, but most of the TVs sold in North America are made in Mexico. The company said it would prepare measures to address US tariffs, including considering moving production of televisions and other home appliances.
