Korean media: The "two pillars" of South Korea are shaking!

On September 5, the Korean media outlet "Newdaily" published an article stating that in the second quarter of 2025, two major manufacturing giants in South Korea, Samsung Electronics and Hyundai Motor, were both hit. Affected by high U.S. tariffs and global trade uncertainties, the performance of both companies was far below market expectations. The semiconductor and automotive industries - the two pillar industries of South Korea - have both been hit, and the shock wave is sweeping across the South Korean economy.

Samsung Electronics recently announced that its second-quarter consolidated operating profit was 4.6 trillion won, down 55.9% from 10.44 trillion won in the same period last year, and 25% lower than the average expectation of 6.2 trillion won from the securities industry. Sales remained roughly the same as the previous year, around 74 trillion won, but due to a significant drop in profit margin, profitability has declined.

The industry generally believes that the poor performance of Samsung is mainly due to three factors. First, U.S. regulations on semiconductors to China have restricted HBM (high-bandwidth memory) exports, causing shipment disruptions to major clients such as NVIDIA. Second, the slow recovery of DRAM and NAND prices has led to continued inventory valuation losses. Third, a slowdown in wafer foundry demand and increased process investment have exacerbated profit pressure.

Especially, the restrictions on semiconductor equipment to China and the strengthening of tariffs have become a variable in Samsung's global supply chain strategy. Samsung Electronics has expanded its factory in Taylor, Texas, USA, but it is reported that equipment procurement and cost burden will exceed expectations.

Hyundai Motor was also severely hit by U.S. tariff policies at the same time. Hyundai Motor's sales in the second quarter were 48.2867 trillion won, up 7.3% compared to the previous year, but its operating profit fell 15.8% to 3.6016 trillion won. Net profit also dropped from 4 trillion won last year to 3.2504 trillion won this year.

This is analyzed as a consequence of the 25% additional tariffs imposed by the United States on automobiles and parts since April. Hyundai Motor sells more than 1 million vehicles annually in North America, with a dependence on the U.S. market of as high as 40%. In the second quarter, Hyundai Motor sold 256,000 units in the United States, an increase of 10.3% compared to 232,000 units in the same period last year, but the profit margin decreased due to the tariff impact.

In fact, Hyundai Motor announced that the operating profit reduced due to the tariff impact in the second quarter reached 82.8 billion won. Considering that Hyundai Motor froze the sales price in the United States to maintain price competitiveness, the operating profit for the second quarter decreased by about 67 billion won compared to the same period last year, most of which was due to the tariff.

Hyundai Motor's global sales of environmentally friendly vehicles reached 262,126 units, an increase of 36.4% compared to the previous year. Sales of pure electric vehicles and hybrid vehicles increased to 78,802 and 168,873 units respectively, but due to increased global incentives and intensified competition leading to higher costs, the profit margin actually declined.

Hyundai Motor's influence in the U.S. electric vehicle market is also declining. According to the electric vehicle market analysis report by Kelley Blue Book, Tesla's sales in the United States decreased by 12.6% to 145,350 units in the second quarter of this year, while General Motors' sales soared by 111% to 46,280 units. Hyundai Motor Group's sales were 21,493 units, a decrease of 42% compared to the previous year, handing over the second place to General Motors.

The industry believes that the recent performance shocks of Samsung Electronics and Hyundai Motor have exposed the structural fragility and trade policy risks of South Korean manufacturing. This is because, due to limited means to respond to delayed tariff negotiations, both Samsung Electronics and Hyundai Motor have suffered from increased costs, deteriorated profitability, and supply chain reorganization.

Samsung Electronics and Hyundai Motor are striving to minimize losses by expanding production, domestication of components, and diversification of the supply chain according to U.S. tariff policies. However, considering the related investment costs, the financial burden is inevitable, and it is expected that performance cannot be maintained in the short term.

Original: www.toutiao.com/article/1842389569593353/

Statement: This article represents the views of the author.