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Samsung Electronics has warned that US tariffs will hit demand for its merchandise because the world’s largest maker of reminiscence chips and smartphones introduced a downbeat outlook for the yr.
The South Korean firm stated “growing policy risks” would improve uncertainty for its chip enterprise, whereas tariffs would elevate costs for smartphone elements and put downward strain on cell machine gross sales.
“Ongoing uncertainty surrounding US tariff policies continues to pose a potential risk of demand slowdown,” stated chief monetary officer Park Quickly-cheol throughout an earnings name on Wednesday.
“We believe changes to the tariff policies in major economies as well as stronger export controls against [artificial intelligence] have already been adding to rising uncertainties in expected demand in the second half.”
Donald Trump’s pause of his “reciprocal tariffs” had inspired some prospects to maneuver up their orders, Samsung stated, however the firm cautioned the frontloading might have “some negative impact” on demand within the second half of the yr.
The warning got here as Samsung’s chip enterprise reported a roughly 40 per cent drop in first-quarter working revenue as gross sales of its high-bandwidth reminiscence chips utilized in AI {hardware} have been hit by more durable US export controls on China.
Analysts estimate Samsung generates a few third of its HBM gross sales in China. The export controls’ impression outweighed a rise in orders from Chinese language prospects stockpiling reminiscence chips forward of US levies.
Most semiconductors have been exempt from Trump’s “reciprocal tariffs”, however the president has stated he plans to impose duties on chips “very soon”. The US has additionally been tightening restrictions on chipmakers promoting to China after Chinese language AI start-up Deepseek’s breakthroughs this yr.
Samsung shares fell 0.4 per cent on Wednesday together with the broader Kospi benchmark. The corporate’s shares are down greater than 28 per cent for the yr because it has didn’t trip the AI growth.
The chipmaker is struggling to meet up with rival SK Hynix, whose shares have risen 2 per cent this yr, within the high-margin HBM enterprise. Samsung’s superior HBM chips have but to go qualification checks for Nvidia, a serious shopper of each corporations.
Samsung spent Won9tn ($6.3bn) on analysis and growth within the first quarter, up 16 per cent from a yr in the past, amid rising concern over its weakening technological edge. It plans to extend manufacturing of its superior 12-layer HBM3E chips within the present quarter because it expects sturdy demand for AI servers.
“The memory cycle seems to have hit the bottom, but the company’s shares have been weighed by growing uncertainties related to tariffs and regulations,” stated Albert Yong, managing companion at Petra Capital Administration, a Seoul-based hedge fund. “Samsung’s performance is unlikely to improve dramatically without HBM sales to Nvidia.”
The US has suspended “reciprocal tariffs” on dozens of nations, together with South Korea and Vietnam, till July however a minimal 10 per cent obligation nonetheless applies and is prone to improve costs of Samsung’s varied client electronics reminiscent of smartphones and TVs.
Samsung produces almost half of its smartphones in Vietnam, whereas most of its TVs bought in North America are made in Mexico. The corporate stated it might put together measures to deal with US tariffs, together with contemplating relocating the manufacturing of TVs and different residence home equipment.
