Samsung Foresees Impact of US Tariffs on Demand and Pricing

04/30/2025 Financial

Samsung is bracing for potential headwinds as US tariff policies and export controls cast a shadow over the tech landscape. During a recent earnings call, the company's CFO, Soon-cheol Park, cautioned that ongoing uncertainties surrounding US trade regulations could lead to a slowdown in demand for its products.

The crux of the issue lies in the potential impact of tariffs on both consumer electronics and components. The company anticipates that US tariff policies, coupled with stricter export controls targeting artificial intelligence products, will likely affect overall demand in the latter half of the year. This could translate to dampened sales figures and increased pressure on revenue streams.

Tariffs and Component Costs

Beyond affecting consumer demand, tariffs are also expected to inflate the cost of essential components used in Samsung's mobile devices. This added expense could lead to price adjustments for consumers, potentially impacting sales volume and market share.

Q1 2025 Financial Performance

Samsung's recent earnings call also shed light on its performance for the first quarter of 2025, ending on March 31. The company reported a record-breaking KRW 79.14 trillion ($55.6 billion) in revenue, largely driven by strong sales of the Galaxy S25. However, profit margins experienced a slight dip, with KRW 6.7 trillion ($4.7 billion) recorded, compared to KRW 6.5 trillion ($4.6 billion) in the previous quarter.

Chip Business Affected by Export Controls

The company's chip business has already felt the sting of stricter US export controls imposed on chips used in AI hardware, particularly concerning exports to China. This division reported KRW 1.1 trillion ($774 million) in operating profit, a decrease from the KRW 2.9 trillion ($2 billion) reported in the previous quarter. While Chinese customers had previously stockpiled memory chips in anticipation of US tariffs, the impact of export restrictions ultimately overshadowed this initial surge in orders.

Looking ahead, potential tariffs on semiconductors and consumer electronics, primarily manufactured in Vietnam and Mexico, could lead to increased prices for Samsung's smartphones and TVs, further complicating the company's financial outlook.