Samsung Electronics posted stronger-than-expected Q1 earnings, but flagged rising global trade tensions and U.S. tariffs as risks to its semiconductor and smartphone businesses in the months ahead.

Samsung Cautions on Tariff-Driven Volatility Despite Q1 Earnings Beat

Samsung Electronics posted a modest rise in first-quarter operating profit, supported by solid demand for smartphones and memory chips. However, the company warned that rising global trade tensions, particularly U.S.-led tariffs, are clouding the outlook for its semiconductor and mobile businesses.

The South Korean tech giant reported an operating profit of 6.7 trillion won ($4.68 billion) for the quarter ending March 2025, a 1.2% increase from the previous year and in line with market expectations. Revenue climbed 10% year-over-year to 79.1 trillion won.

Earnings were buoyed by strong early sales of the Galaxy S25 smartphone series and customer stockpiling of semiconductors and handsets ahead of potential new U.S. tariffs. Despite this, Samsung flagged growing headwinds in the form of escalating trade restrictions and geopolitical instability, which could hurt demand in the second half of the year.

“Recent changes in global tariff policies and stricter controls on AI chip exports are creating heightened uncertainties,” said Kim Jae-june, EVP of Samsung’s memory division.

The company noted that the semiconductor division’s profit fell 42% year-over-year to 1.1 trillion won, citing lower average selling prices and the impact of U.S. export curbs on AI chips. Sales of high-bandwidth memory (HBM) also declined, though Samsung said it had supplied enhanced HBM3E samples and expected gradual recovery in the coming quarters.

Samsung is reportedly considering shifting TV and appliance production away from some countries, including Vietnam and South Korea, as a precaution against extended tariff threats. CFO Park Soon-cheol expressed cautious optimism, expecting a gradual improvement in performance if the current uncertainties ease.

Samsung’s mobile division, by contrast, reported a strong quarter, with profit rising 23% to 4.3 trillion won—its best in four years—fueled by AI-powered features in the latest Galaxy models and cost optimization measures.

Still, analysts remain wary of the company’s outlook, especially as Samsung lags behind SK Hynix in the booming HBM market tied to AI demand. SK Hynix recently posted a 158% surge in quarterly operating profit, highlighting the competitive pressure in memory chip sales.

Samsung acknowledged its trailing position in HBM supply to companies like Nvidia but affirmed ongoing R&D efforts to close the gap, with R&D spending up 16% year-over-year.

Looking ahead, Samsung plans to maintain momentum in smartphones with the release of the Galaxy S25 Edge and further integration of AI features. In the memory segment, it expects demand from AI servers to drive growth but warned that customer stockpiling could depress sales later in the year.

Shares of Samsung Electronics dipped 0.4% following the earnings release, tracking the broader market.