Samsung, one of the world’s largest makers of semiconductors and consumer electronics, has seen reduced demand for AI chips in early 2025. These chips power many devices and services that rely on artificial intelligence. However, global buyers appear to be pulling back after a surge in 2024.
Analysts predict that Samsung’s Q1 operating profit could fall by nearly 15% compared to the same period last year. The company will officially release its earnings later this week.
“We expect to see softness in semiconductor earnings due to weaker AI chip sales,” said Lee Min-soo, a tech analyst at Korea Investment & Securities.
The chip division, which usually drives a large part of Samsung’s profits, is facing increased competition from other global players like Nvidia and AMD.
Mexico Factory Shields TV Business from U.S. Tariffs
Amid rising trade tensions between the U.S. and China, former President Donald Trump has called for higher tariffs on foreign-made electronics. This includes televisions and other home appliances. But Samsung may be better positioned than some competitors.
The South Korean company manufactures many of its TVs in Mexico, which is part of the United States-Mexico-Canada Agreement (USMCA). This could help Samsung avoid added import taxes on goods entering the U.S. market.
“Our operations in Mexico give us a strategic advantage,” a Samsung spokesperson said. “It helps us serve U.S. customers faster and at a lower cost.”
Companies like Sony, which rely more on factories in China or Southeast Asia, could face steeper costs if tariffs increase. That would give Samsung a price advantage at retail stores across the U.S.
Samsung’s Global Strategy: Diversify and Adapt
Samsung’s move to produce TVs in Mexico is part of a larger strategy. The company has been diversifying its supply chain in recent years to reduce its dependence on any one country.
This includes expanding chip production in Texas, smartphone assembly in Vietnam, and research hubs in India and the U.S.
“Samsung is clearly trying to future-proof its business,” said Maya Chen, a global supply chain expert at TechFrontier Consulting. “With rising geopolitical risks, companies need flexible manufacturing options.”
These efforts could help Samsung maintain steady profits across different product lines, even as certain markets slow down.
How Samsung’s Rivals May React
If the U.S. imposes higher tariffs on electronics, rivals such as LG, Hisense, and TCL may need to make quick adjustments. Some might consider shifting production to Mexico or the U.S., but that could take time and money.
Samsung, meanwhile, may gain market share simply by maintaining steady supply and pricing.
Retailers in the U.S. are also watching the situation closely. If tariffs rise, prices on imported TVs could increase by 10–20%. This would push more customers toward brands like Samsung that are less affected by the new policies.
What to Expect Next
Samsung will report its full Q1 financials later this week. Investors and analysts will focus on three key areas:
- Chip division performance: How much did AI chip sales actually fall?
- TV division growth: Can the Mexico advantage boost U.S. sales?
- Forward outlook: Will Samsung adjust its strategy for the rest of 2025?
If the company delivers better-than-expected results from its TV unit, it could help soften the blow from falling chip demand.
Samsung’s Q1 may not be its strongest quarter, but the company’s smart manufacturing strategy could help balance the books. As global trade tensions remain high, businesses with flexible operations like Samsung’s are better equipped to weather sudden policy changes.
