SEOUL (Reuters) – Samsung Electronics on Wednesday dropped its business outlook for the current quarter and warned U.S. tariff policies could cut demand for its key products such as smartphones.
The technology giant said it expected its semiconductor business to encounter greater uncertainties throughout the year, while its smartphone shipments faced downward pressure in the second quarter.
“Ongoing uncertainty surrounding U.S. tariff policies continues to pose a potential risk of demand slowdown,” a Samsung executive told analysts on an earnings call.
The world’s largest memory chipmaker reported a small rise in first-quarter operating profit as customers concerned about U.S. tariffs rushed to purchase smartphones and commodity chips, mitigating the impact of its underperforming artificial intelligence chip business.
Samsung reported 6.7 trillion won ($4.68 billion) in operating profit for the quarter ended in March, up 1.2% from a year earlier and in line with its earlier estimate.
Samsung shares, one of the worst-performing major tech stocks last year, fell 0.4% in line with the broader market.
Steep U.S. tariffs on Chinese goods and toughening restrictions on AI chip sales to China, Samsung’s top market, threaten to dampen demand for some of the electronics components the company produces such as chips and smartphone displays.
U.S. President Donald Trump’s “reciprocal” tariffs, most of which have been suspended until July, threaten to hit dozens of countries including Vietnam and South Korea where Samsung produces smartphones and displays.
Samsung said it was considering relocating the production of TVs and home appliances in response to the tariffs.
STRONG MOBILE PROFIT
Samsung’s mobile device and network business reported a 23% rise in profit to 4.3 trillion won during the period, reaching its highest level in four years, helped by the latest version of the flagship Galaxy S model with AI features.
Samsung has accelerated smartphone production in Vietnam, India and South Korea ahead of the U.S. duties, a person familiar with the matter told Reuters earlier.
While mobile performed strongly, the chip division’s operating profit slumped 42% to 1.1 trillion won from a year earlier despite chip stockpiling by some customers.
Samsung reported a fall in sales of High Bandwidth Memory (HBM) – used in AI processors – due in part to U.S. export controls on AI chips.
Analysts estimate that about one third of Samsung’s HBM revenue has come from China, and it lags behind cross-town rival SK Hynix in supplying such chips to Nvidia in the United States.
SK Hynix last week logged its second-highest quarterly operating profit in the first quarter with a 158% jump to 7.4 trillion won, boosted by strong AI-related demand.
Samsung said it expected robust demand for AI servers to continue in the current quarter, and planned to ramp up its enhanced 12-layer HBM3E chips during the period.
Revenue rose 10% to 79.1 trillion won in the January-to-March period, in line with its earlier estimate of 79 trillion won.
($1 = 1,431.5000 won)
(Reporting by Hyunjoo Jin and Joyce Lee and Heekyong Yang; Editing by Stephen Coates)
