Customers stockpiled chips and pre-purchased smartphones before the U.S. tariffs and export control measures took effect, boosting Samsung Electronics' quarterly profit.
This morning on April 8th, the company's shares rose by 2.1% as the South Korean company forecast its first-quarter operating profit to reach 6.6 trillion Korean won (approximately RMB 330 billion), higher than the LSEG SmartEstimate of 5.2 trillion Korean won (approximately RMB 260 billion), with sales expected to grow by about 10%.
The strong sales of the Galaxy S25 series smartphones drove the performance. The Galaxy S25 series smartphones, launched in February this year, exceeded one million units in sales in South Korea within 21 days, partly driven by a pre-sale craze among North American consumers who wanted to complete their purchases before prices increased due to U.S. tariff hikes.
The Verge
However, Samsung's smartphone business is expected to be directly impacted by Trump's tariffs.
Last week, Trump announced a 25% tariff on imports from South Korea, which could lead to price increases for various consumer electronics products such as Samsung smartphones, televisions, and other home appliances. Trump also announced a 46% tariff on imports from Vietnam—half of Samsung's smartphones are produced there. Additionally, most of the televisions Samsung sells in North America are manufactured in Mexico, where products will face a 20% U.S. tariff.
Meanwhile, although most semiconductors were excluded from the tariffs announced by Trump last week, he stated the next day that tariffs on chip imports would be "soon" implemented.
Despite the better-than-expected performance in the first quarter, analysts pointed out that Samsung's semiconductor division still faces many challenges: continuous decline in chip prices, delayed delivery of AI chips, and expanding losses in the foundry business.
This means that there is a high possibility that Samsung's second-quarter sales will stall.
CW Chung, co-head of equity research at Nomura Securities Asia-Pacific, said, "Due to strong demand for chips in China, the decline in chip prices was less than expected in the first quarter. Chinese customers stockpiled HBM high-bandwidth memory and traditional chips before the tariffs took effect, and consumers also purchased Galaxy S25 phones before the price increase. However, Samsung's sales are likely to fall back in the second quarter."
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