Trump Tariffs Could Hurt Samsung’s Business

The bulk of Samsung smartphones have long been manufactured in Vietnam, but this does not mean that a possible increase in duties on imports of Chinese-assembled products to the United States will not affect the business of the South Korean giant. The worst situation is with the production of memory, up to 40% of which Samsung produces in China.

Image Source: Samsung Electronics

In fact, it was the high concentration of memory chip production in China that forced Samsung, along with its similarly situated rival SK hynix, to seek an export waiver from the US government on the supply of advanced chip-making equipment to China a couple of years ago. The waiver was first granted for a year and then made permanent, allowing Samsung and SK hynix to continue upgrading their facilities in China, provided that the associated technologies and products did not go to Chinese customers under US sanctions. However, SK hynix has been unable to explain how its memory chips are still making their way into Huawei smartphones.

Now, as Pune News explains, under the threat of increasing import duties on Chinese-assembled smartphones in the US to 10% on Trump’s initiative, the Korean Samsung Electronics has begun to look for opportunities to organize additional production of smartphones outside of China. According to Samsung’s plan, it will take an equal part in the production of devices along with its contractors outside of China. However, the search for such partners is still ongoing, and the success of this initiative is not guaranteed. By the way, Vietnamese Samsung products may also be subject to additional duties in the US, so the vector of production transfer remains uncertain.

Samsung still makes about 20% of its smartphones in China through partnerships with local contractors, and finding new sites outside the country to supply the U.S. market may not be an easy task.

The Trump administration also intends to impose a 25% tariff on semiconductor components imported into the United States, and Samsung Electronics products may be included in this list. Samsung’s facilities in the United States have traditionally focused on contract manufacturing of logic components, and retooling them for memory production would be impractical. However, some of Samsung’s facilities in Texas are still under construction, and their intended purpose may be changed in accordance with the political situation.