The global semiconductor market is experiencing a special cycle driven by geopolitics. As the world's largest memory chip manufacturer, Samsung Electronics recently released its first quarter 2024 earnings forecast, showing that its operating profit surged to 6.6 trillion won (about 4.5 billion U.S. dollars) year-on-year, far exceeding market expectations. Behind this impressive data lies the "chip rush" forced by the U.S. tariff policy and the life-and-death race of global technology companies to cope with supply chain changes.

1. The tariff countdown triggered a wave of stockpiling, and Samsung became the biggest beneficiary

As the US government announced that it would impose 25%-46% tariffs on consumer electronics and chip imports from South Korea, Vietnam and other places, global technology companies have launched an unprecedented stocking competition. Data shows that Samsung's semiconductor division's sales in the first quarter increased by more than 10% year-on-year, with high-bandwidth memory (HBM) components and AI chips becoming the focus of rush purchases. This "panic purchase" directly pushed up the price of memory chips, with NAND flash memory contract prices rising by 15-20% in the quarter, and DRAM prices also stopped falling and rebounded.

The stockpiling efforts of Chinese technology companies are particularly astonishing. Since the United States tightened its chip export controls on China, Baidu, ByteDance and other companies have signed multi-year chip supply agreements with Samsung through their subsidiaries. Among them, Baidu purchased hundreds of millions of dollars worth of logic chips at one time to ensure the computing power required for its AI large model training. This strategy of "locking production capacity in advance" has caused Samsung's Xi'an factory to be overloaded for three consecutive months.

2. Technological breakthrough in the AI chip arms race

Despite the short-term performance, Samsung is facing severe challenges in the high-end AI chip market. In order to pass the qualification certification of Nvidia's H100/H200 chips, Samsung had to redesign the fifth-generation HBM3E memory, which caused its AI chip shipments to lag behind SK Hynix by at least one quarter. In terms of foundry business, although it has won AI chip orders from Chinese customers such as Baidu, the

yield problem of advanced processes below 4nm has not been completely solved, and the losses of the foundry department have continued to expand to 1.2 trillion won.

However, new opportunities are born in crises. With the breakthroughs of China's self-developed AI models such as DeepSeek, the market demand for "special edition" AI chips has surged. Samsung cleverly used the US export control rules and successfully provided a compliant solution for Nvidia's H20 chip by adjusting the number of HBM stacking layers and interface design. This "technical micro-innovation" has opened up a unique living space for it in the restricted market.

3. Tariff defense battle in the consumer electronics sector

In the field of smartphones, Samsung has staged a textbook tariff response strategy. By advancing the North American pre-sale of the Galaxy S25 series by two months, it successfully avoided the impact of the 25% import tariff. The TV production capacity of the Mexican factory also increased to a historical peak before the tariff took effect, taking advantage of the North American Free Trade Agreement window period to complete inventory preparation. This "time difference strategy" has enabled the mobile division's operating profit margin to rise against the trend to 12.3%, a three-year high.

However, the 46% tariff on Vietnam's production base is still like a sword of Damocles. Samsung has urgently transferred some mobile phone molds to its Indian factory and started verification tests on its Brazilian production line. Supply chain sources revealed that if the tariff policy continues, Samsung may restructure its global manufacturing layout in the next two years and reduce Vietnam's production capacity from 49% to less than 30%.

IV. Cycle turning point and risk warning

Market analysis agencies generally believe that the current prosperity of the chip market contains irrational factors. Goldman Sachs' report pointed out that the price of memory chips may reach a real turning point in Q3, when the decline in stockpiling demand and the release of new production capacity will form a double pressure. What is more worthy of attention is that the overdrawn demand in Q1 may cause the semiconductor sales in Q2 to decline by 8-10% month-on-month, especially the inventory of mature process products such as smartphone panel driver chips has approached the warning line.

For Samsung, this feast brought about by tariffs is both an opportunity and a test. It needs to complete three major strategic adjustments in the second half of the year: speed up the mass production of HBM4 memory to compete for the dominance of AI chips, promote the manufacturing process to break through the 3nm technology bottleneck, and build a multi-regional decentralized intelligent manufacturing network. As KBSecurities analysts said: "The semiconductor industry is moving from globalization 1.0 to the era of geopolitical 2.0. Only companies that have both technological discourse power and supply chain flexibility can be invincible."

In this unprecedented industrial change, Samsung Electronics' quarterly profit growth not only reflects the fragility of the global technology supply chain, but also foreshadows the cruelty of a new round of technological competition. When tariff barriers and the AI revolution are superimposed, every decision made by chip giants will have a profound impact on the technology industry landscape in the next decade.