Samsung Warns of Lower Q2 Outlook Amid Global Trade and Tariff Woes

Samsung Electronics has lowered its outlook for the second quarter of 2025, citing growing uncertainty in global trade and U.S. tariff policies. The South Korean tech giant is concerned that U.S. tariffs could weaken demand for its core products, especially smartphones and semiconductors.

A slight increase in the first-quarter operation profit was reported by the South Korean company in its latest financial update. The first-quarter operation profit reached 6.7 trillion won ($4.68 billion) which is 1.2% more from the same period last year. This growth was mainly supported by customers rushing to stock up on smartphones and standard memory chips ahead of potential tariff increases.

However, Samsung’s semiconductor division is expected to face more challenges as the year progresses. The company noted that frontloading—early purchases made in anticipation of price hikes—could slow down demand in the second half of the year. Stricter U.S. export rules on AI chips, especially to China, are another concern, given that China is a major market for Samsung’s high-end chips and displays.

Samsung also acknowledged that it may shift production of TVs and home appliances to different locations to reduce the impact of upcoming U.S. tariffs. While AI servers and early chip buying are currently driving demand, future sales could decline due to evolving global trade policies.

In the mobile segment, Samsung saw strong performance. A hefty 23% increase in operation profit was reported in the mobile and network division reaching 4.3 trillion won. This was driven by strong sales of its latest Galaxy S series, which features enhanced AI capabilities.

Meanwhile, the chip division recorded a 42% drop in profit to 1.1 trillion won despite early buying by customers. Sales of High Bandwidth Memory (HBM) chips, crucial for AI processing, declined due to U.S. export controls. Still, Samsung said it has started shipping samples of its next-gen HBM3E chips and expects gradual recovery.

Although Samsung remains hopeful for the second half, it is preparing for a more volatile market. Trade tensions and AI export restrictions remain key risks that could shape its performance in the months ahead.

Source: The Economic Times