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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 12 months.
The South Korean firm stated “rising coverage dangers” would enhance uncertainty for its chip enterprise, whereas tariffs would increase costs for smartphone parts and put downward strain on cellular system gross sales.
“Ongoing uncertainty surrounding US tariff insurance policies continues to pose a possible danger of demand slowdown,” stated chief monetary officer Park Quickly-cheol throughout an earnings name on Wednesday.
“We consider adjustments to the tariff insurance policies in main economies in addition to stronger export controls towards [artificial intelligence] have already been including to rising uncertainties in anticipated demand within 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 unfavorable impression” on demand within the second half of the 12 months.
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 memory 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 quickly”. The US has additionally been tightening restrictions on chipmakers promoting to China after Chinese language AI start-up Deepseek’s breakthroughs this 12 months.
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 12 months because it has did not journey the AI increase.
The chipmaker is struggling to meet up with rival SK Hynix, whose shares have risen 2 per cent this 12 months, within the high-margin HBM enterprise. Samsung’s superior HBM chips have but to move qualification assessments for Nvidia, a serious consumer of each corporations.
Samsung spent Won9tn ($6.3bn) on analysis and growth within the first quarter, up 16 per cent from a 12 months 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 robust demand for AI servers.
“The reminiscence cycle appears to have hit the underside, however the firm’s shares have been weighed by rising uncertainties associated to tariffs and laws,” stated Albert Yong, managing associate at Petra Capital Administration, a Seoul-based hedge fund. “Samsung’s efficiency is unlikely to enhance dramatically with out HBM gross 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 more likely to enhance costs of Samsung’s numerous client electronics equivalent to 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 will put together measures to deal with US tariffs, together with contemplating relocating the manufacturing of TVs and different dwelling home equipment.
