Samsung Says Trade Turmoil Raises Chip Business Volatilities, May Hit Phone Demand

South Korean technology giant Samsung Electronics warned on Wednesday US tariffs could cut demand for products such as smartphones, making it difficult to predict future performance.
According to Reuters, Samsung said it expected its semiconductor business to encounter greater uncertainties throughout the year, while its smartphone shipments faced downward pressure in the second quarter.
The cautious outlook from one of the world's biggest electronics manufacturers reflects the uncertainties roiling global trade due to US President Donald Trump's tariff war, and comes a day after General Motors pulled its annual forecast.
The world's largest memory chipmaker reported a small rise in first-quarter operating profit as customers concerned about US tariffs rushed to purchase smartphones and commodity chips, mitigating the impact of its underperforming artificial intelligence chip business.
It 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 US 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.
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.
Chip demand is expected to remain solid in the second quarter, driven by AI servers and preemptive purchasing activities after the pause in tariffs, Samsung said.
But it warned that the frontloading of chip shipments by some customers may have a negative impact on demand later this year.
“We believe that demand uncertainties are growing in the second half as a result of recent changes in tariff policies in major countries, and strengthening of AI chip export controls,” Kim Jae-june, a Samsung vice president in the memory division, said on an earnings call.
Samsung CFO Park Soon-cheol said however that "we cautiously expect the overall performance to gradually improve as we move into the second half, assuming the easing of current uncertainties".
Some analysts were unconvinced, saying the company did not give detailed guidance for its struggling AI chip business.
"With pull-in demand still ongoing and macro uncertainty lingering, the explanation for the 'first-half low, second-half rebound' outlook was lacking," Ryu Young-ho, a senior analyst at NH Investment & Securities said.
AI CHIPS
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 US 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 US export controls on AI chips.
Samsung said it had supplied samples of its enhanced HBM3E products to major customers and expected HBM sales, which have bottomed out in the first quarter, to "gradually" rise from the second quarter, without offering detailed targets.
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.
Revenue rose 10% to 79.1 trillion won in the January-to-March period, in line with its earlier estimate of 79 trillion won.

Huawei launched two new laptop models on Monday, the first sold with its own Harmony operating system, in a bid to take on well-established Western Big Tech rivals even as the United States seeks to limit its access to crucial chips.

Despite its emergence as the world's leading producer of tech hardware, China's development of computer operating systems has lagged behind Microsoft (MSFT.O), and Apple (AAPL.O), whose Windows and macOS have cornered the global market for decades.

The new MateBook Fold and MateBook Pro both run on HarmonyOS 5, the latest version of an operating system Huawei Technologies began developing in 2015 and introduced five years later on its Mate series smartphones, Reuters reported.

It began developing the laptop prototypes in 2021.

"The Harmony laptop gives the world a new choice," Yu Chengdong, head of Huawei's consumer business group, said during a livestreamed launch event. "We kept on doing the hard things but the right things."

The base model of the MateBook Fold, which does not have a physical keyboard and offers an 18-inch OLED double screen when fully extended, will sell for 23,999 yuan ($3,328).

The MateBook Pro model, which uses a conventional laptop keyboard, is priced from 7,999 yuan.

Washington began restricting Huawei's access to U.S. technology in 2019 over national security concerns, pushing the company to build its own capacity to develop and produce chips and operating systems.

Huawei said the HarmonyOS for computers currently offers over 150 applications, including WPS Office from Kingsoft (3888.HK), - an alternative to Microsoft's Office - and photo editing app Meitu (1357.HK), Xiu Xiu.

By the end of 2024, over 7.2 million individual developers were developing apps for HarmonyOS, which was installed on over a billion devices, including smartphones and TVs, according to Huawei's latest annual report.

Huawei did not disclose which processing chip it had used to power the newly-launched laptops. But it said the computers' relatively high prices were the result of the cost of new manufacturing technology for the chipset.

Samsung Says Trade Turmoil Raises Chip Business Volatilities, May Hit Phone Demand