Samsung Electronics has cautioned that escalating U.S. tariffs and tightening export controls could significantly dampen global demand for its smartphones and semiconductor products, clouding the company’s outlook for the remaining year.
In its first-quarter earnings report, Samsung said it is facing growing demand uncertainties in the second half of the year particularly due to recent shifts in tariff policies across major global markets and stricter regulations on artificial intelligence ,AI, chip exports.
The world’s largest memory chip and smartphone manufacturer reported operating profit of 6.7trn won ,$4.68bn, for the quarter ended March, a modest 1.2% increase from a year earlier, matching previous guidance.
The uptick was largely attributed to a short-term surge in demand from customers rushing to secure smartphones and commodity chips ahead of potential tariff hikes.
Despite the better-than-expected quarterly performance, Samsung issued a cautious tone regarding the future.
It noted that smartphone shipments were under pressure in the second quarter, and its semiconductor business could face heightened uncertainties, particularly in key markets such as China and Vietnam.
“The frontloading of chip purchases by customers in anticipation of tariff changes may lead to softer demand later in the year”, said Executive Vice President of Samsung’s Memory Division, Kim Jae-june during an earnings call.
He emphasized that policy shifts in the U.S. and other major economies are likely to weigh on overall demand and complicate production planning.
The warning comes amid heightened global trade tensions, driven in large part by the U.S. government’s ongoing tariff disputes.
President Donald Trump’s “reciprocal” tariffs most of which are temporarily suspended until July target a wide range of goods from countries including China, Vietnam, and South Korea, all key nodes in Samsung’s supply chain.
Washington’s move to expand controls on AI chip exports to China has also added to the company’s regulatory and operational burdens.
Samsung said it is considering relocating production facilities for TVs and home appliances to mitigate the impact of tariffs.
The company currently manufactures a significant portion of its consumer electronics in tariff-affected regions.
Despite the broader macroeconomic challenges, Samsung noted that demand for semiconductors remains relatively strong, particularly driven by AI servers and data center expansion, according to Reuters.
However, executives cautioned that this momentum could falter if global trade disruptions persist or intensify.
Samsung’s shares slipped 0.4% on Wednesday, tracking the broader market, amid investor concerns over the company’s long-term growth prospects and the broader implications of trade instability.