Samsung Sees Rising Chip Uncertainty and Slowing Smartphone Demand in Wake of U.S. Tariff Policies
Seoul, April 30, 2025 — Samsung Electronics has issued a cautionary note regarding the growing unpredictability in its semiconductor division and potential slowdown in smartphone demand, pointing to rising global trade tensions and upcoming U.S. tariffs.
The company’s Q1 operating profit rose by a modest 1.2% to 6.7 trillion won ($4.68 billion), buoyed by pre-emptive purchases of chips and smartphones by customers seeking to avoid upcoming U.S. duties. Despite this, Samsung flagged increased volatility ahead due to mounting trade barriers and export restrictions targeting AI chips.
Profits Rise But Challenges Loom
Samsung’s mobile division led the earnings, generating 4.3 trillion won in profit—the highest in four years—thanks to the strong performance of its latest Galaxy S series, equipped with AI features. In contrast, its chip business struggled, with profits falling 42% to 1.1 trillion won, weighed down by weak AI chip sales and U.S. controls affecting exports to China.
The warning comes shortly after General Motors pulled its annual forecast, underscoring the broader market concern around escalating trade disputes.
Tariffs Cloud Outlook
Samsung emphasized that tariffs from the Trump administration—set to take effect in July—could dampen demand for critical components like memory chips and OLED displays, especially from countries like Vietnam and South Korea, where Samsung has major manufacturing hubs. The company is now considering relocating TV and appliance production as a strategic response.
Chip demand may remain strong in Q2, aided by AI server deployments and advance purchasing. However, Samsung cautioned that this frontloading might depress demand later in the year.
“Uncertainty is growing in the second half due to changes in tariff policy and enhanced AI export restrictions,” said Kim Jae-june, Vice President of Samsung’s memory division.
Mixed Analyst Sentiment
Despite optimistic projections for H2 recovery, some analysts expressed doubts. Samsung did not offer specific guidance on how it plans to revitalize its lagging AI chip segment.
“While Samsung hints at a second-half rebound, the lack of clarity around its AI chip roadmap makes this outlook questionable,” said Ryu Young-ho, senior analyst at NH Investment & Securities.
Samsung reported lower-than-expected sales of High Bandwidth Memory (HBM) chips—critical for AI computing—due largely to export curbs. The company said it has shared samples of its improved HBM3E chips with major clients and expects sales to recover gradually.
Samsung Lags Behind SK Hynix
Samsung’s rival, SK Hynix, outperformed with a 158% surge in quarterly profit, hitting 7.4 trillion won, thanks to robust demand for AI-related memory products. In comparison, Samsung’s chip division lags behind in supplying to major U.S. AI players like Nvidia.
Total Samsung revenue for Q1 stood at 79.1 trillion won, marking a 10% year-on-year increase, matching earlier forecasts.
Samsung’s long-term performance now hinges on how global trade dynamics evolve and whether AI chip demand rebounds fast enough to offset the semiconductor headwinds.
