Samsung Electronics warned that U.S. tariffs will meet demand with demand from the world's largest memory chip and smartphone manufacturers, a decline in appearance that year.
The South Korean company said the "growing policy risks" would increase uncertainty in its chip business, while tariffs would raise the price of smartphone components and put down pressure on mobile device sales.
"The ongoing uncertainty surrounding U.S. tariff policy continues to pose a potential risk for a slowdown in demand," Chief Financial Officer Park Soon-Cheol said in a revenue call on Wednesday.
“We believe that tariff policies in major economies and changes in stronger export controls targeting (AI) have increased uncertainty about expected demand in the second half of the year.”
Samsung said Donald Trump's "reciprocal tariffs" suspended his "reciprocal tariffs" and encouraged some customers to raise orders, but the company warned that the previous load could have a "negative impact" on demand in the second half of the year.
The warning is because Samsung's CHIP business reported that operating profit fell about 40% in the first quarter as sales of high-bandwidth memory chips used in AI hardware were subject to stricter export controls from the United States to China.
Analysts estimate that Samsung's HBM sales in China are about one-third. The impact of export control is greater than the increase in orders from Chinese customers, and the inventory of memory chips we collect.
Most semiconductors are exempt from Trump's "reciprocal tariffs", but the president said he plans to impose responsibilities on the chips "soon." The U.S. has been tightening restrictions on chipmakers sold to China after the breakthrough this year by Chinese AI startup DeepSeek.
Samsung shares fell 0.4% on Wednesday, with the broader KOSPI benchmark falling. The company's stock has fallen more than 28% in the year as it fails to drive the AI boom.
The chip maker is struggling to catch up with rival SK Hynix, whose shares have risen 2% this year in the high-profit HBM business. Samsung's premium HBM chips have not yet passed the qualification test for NVIDIA, a major customer of both companies.
Samsung spent 9TN ($6.3 billion) in research and development in the first quarter, up 16% from the same period last year as people became increasingly concerned about the recession of its technological advantages. It plans to increase production of its premium 12-layer HBM3E chips in the current quarter as it expects strong demand for AI servers.
"The memory cycle seems to have reached its lowest point, but the company's stock weighs the uncertainty related to tariffs and regulations," said Albert Yong, managing partner of Seoul-based hedge fund Petra Capital Management. "Without HBM selling NVIDIA, Samsung's performance is unlikely to improve significantly."
The U.S. has suspended “reciprocal tariffs” in dozens of countries, including South Korea and Vietnam, until July, but at least 10% of responsibilities still apply and is likely to increase prices for Samsung’s various consumer electronics products, such as smartphones and TVs.
Samsung makes nearly half of smartphones in Vietnam, while most of the TVs sold in North America are made in Mexico. The company said it will prepare measures to deal with U.S. tariffs, including considering relocation of production of TVs and other household appliances.