Samsung says tariff agreement reduces uncertainty, expects boost from Tesla deal

A logo of Samsung Electronics is seen at Korea Electronics Show in Seoul, South Korea. (AP Photo/Lee Jin-man)

SEOUL — Samsung Electronics said a trade deal between South Korea and Washington will help to alleviate business uncertainty, as the technology giant forecast more major chip orders after signing a US$16.5 billion deal with Elon Musk‘s Tesla.

U.S. President Donald Trump said the U.S. will charge a 15 per cent tariff on imports from South Korea as part of the deal that eases, for now, tension with a top-10 trading partner and key Asian ally. Imports from South Korea, a powerhouse exporter of computer chips, cars and steel, had faced a 25 per cent rate.

The tariff deal comes days after Tesla said it had signed a deal to source chips from Samsung, a move that analysts said could help the tech giant’s struggling contract business.

“Building on this milestone, we anticipate securing additional orders from large customers,” Samsung Vice President Noh Mi-jung said on an earnings call, referring to its struggling contract chipmaking business.

Samsung’s new U.S. semiconductor factory in Texas, which is expected to make chips for Tesla, is on track to begin production in 2026, she said.

“The key to the Tesla order is how much Samsung would be able to address production yield issues for its advanced 2 nanometer chips,” said Greg Roh, head of research at Hyundai Motor Securities.

The Texas project is central to Samsung Chairman Jay Y. Lee’s strategy of expanding beyond its bread-and-butter memory chip business into high-end contract chip manufacturing, which is dominated by Taiwan’s TSMC 2330.TW.

Noh’s comments came after the company posted 4.7 trillion won ($3.37 billion) in operating profit for the April-June period, its weakest earnings in six quarters. That was roughly in line with an earlier estimate that had disappointed investors.

The South Korean tech giant forecast a gradual second-half recovery for its overall business, without providing further details.

Second-quarter operating profit at its chip division plunged 94 per cent from a year earlier, it said, hurt by delays in supplying the latest AI chips to Nvidia and U.S. export curbs on advanced semiconductor sales to China.

Focus on AI chips

Prolonged weakness in Samsung’s performance has deepened investor concerns over the South Korean company’s ability to catch up with smaller rivals like SK Hynix 000660.KS in developing high-bandwidth memory (HBM) chips used in AI data centers and sold to customers including Nvidia.

Last October, Samsung said it was making progress on a major deal to supply HBM3E chips to an unidentified customer that analysts said was Nvidia.

Samsung on Tuesday did not give an update to the plan, while warning that the supply of HBM3E chips has been growing faster than demand, which would affect pricing.

The tech giant said it has also provided samples of its next-generation HBM4 chips to customers, with a plan to supply them next year. Customers for this chip are also expected to include Nvidia, analysts said.

Samsung said on Thursday it expected the industry environment would improve in the second half of the year, driven by AI chip demand due to continued investments by major cloud service providers.

Meta Platforms and Microsoft on Wednesday pointed to strong AI chip demand and major investments in data centers in their earnings announcements.

Samsung said there were also some concerns about slowing global growth due to an uncertain trade environment and geopolitical risks.

“We believe that the uncertainty has been reduced through the conclusion of negotiations between the United States and South Korea,” Samsung Chief Financial Officer Park Soon-cheol said after Trump announced the trade deal.

Park said Samsung was closely monitoring a U.S. national security probe into imports of semiconductors and electronics such as smartphones, tablets and PCs, which he said could have a significant impact on its businesses.

Samsung’s second-quarter revenue rose 0.7 per cent to 74.6 trillion won, in line with its earlier estimate of 74 trillion won.

Its chip division posted a profit of 400 billion won during the quarter, down from 6.5 trillion won a year earlier, marking the first time in six quarters the figure has dropped below the 1 trillion won mark.

Samsung said in a statement inventory value adjustments to memory chips and one-off costs from the impact of U.S. export restrictions on sales to China on its contract chipmaking business lowered the division’s profit.

Samsung said smartphone demand, which had rebounded in the first half thanks to stockpiling ahead of U.S. tariffs and China subsidies, is expected to see slowing growth in the second half.

For TVs, Samsung expected demand to slightly decline due to inflation and economic uncertainty in the second half from a year earlier.

Shares of Samsung were down 1.8 per cent in early afternoon trade, underperforming the benchmark KOSPI .KS11 index, which was 0.5 per cent lower.

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Reporting by Heekyong Yang and Joyce Lee and Hyunjoo Jin; Editing by Anne Marie Roantree, Jamie Freed and Tom Hogue