The Trump administration's anticipated tariffs have played a hidden role in boosting Samsung Electronics and Apple's second-quarter smartphone business performance. The increase in product prices due to tariffs heightened early purchases, and retailers around the world also increased their procurement of devices significantly to secure sufficient inventory before price hikes. However, with the implementation of tariffs within the year, a smartphone price increase is inevitable, and analyses suggest that the focus on device consumption and inventory purchases in the first half of the year will make it difficult for smartphone performance growth to continue into the second half.
◇ Effects of Trump tariffs lead to double-digit growth in the smartphone market
According to market research firm Counterpoint Research on the 8th, the global smartphone market's sales revenue in the second quarter increased by 10% year-on-year, surpassing $100 billion (approximately 140 trillion won) for the first time in history. This is the first time that the sales revenue for the second quarter has exceeded $100 billion. The second-quarter results for Samsung Electronics and Apple, which dominate the global smartphone market, also recorded earnings surprises.
Samsung Electronics' MX and Network (NW) division recorded an operating profit of 3.1 trillion won in the second quarter of this year, a 39% increase compared to the same period last year (2.23 trillion won). Considering that the total operating profit for Samsung Electronics in the second quarter was 4.7 trillion won, it can be said that the mobile business drove overall performance. During this period, the revenue of the MX and NW division was tallied at 28.5 trillion won, an increase of 6.6% year-on-year. Apple also achieved solid performance in the second quarter of this year (the third quarter of the U.S. fiscal year). During this period, Apple's operating profit was $28.2 billion (39 trillion won), which is an 11.2% increase compared to the previous year. Revenue was also recorded at $94 billion (approximately 131 trillion won), a 9.6% increase year-on-year, surpassing Wall Street's expectations of $89.53 billion. Among these, the iPhone revenue alone was $44.58 billion (approximately 62 trillion won), a 13% increase compared to the previous year. Given that the second quarter is traditionally the off-season for iPhones, this reflects strong performance.
Experts point to the Trump administration's tariffs as a hidden contributor to the strong performance of Samsung and Apple. Kim Kyung-won, a distinguished professor at Korea University, noted, "The increase in early purchases by consumers concerned about smartphone price hikes due to the Trump administration's tariffs, which will take effect in August, is reflected in the results of the second quarter," adding that "retailers securing inventory without tariffs beforehand will be able to endure price increases for several months, and after the price hikes, they can gain capital gains, which likely accelerated the increase in purchases of products." Apple CEO Tim Cook also revealed, "About 1 percentage point of the second-quarter revenue growth was thanks to customers making early purchases in anticipation of future tariffs."
◇ Samsung benefits more than Apple in the U.S.
However, Samsung is the one that has benefitted in the U.S. market, where Trump tariffs are applied directly. According to market research firm Canalys, Samsung Electronics' smartphone shipments in the U.S. market in the second quarter surged 38% year-on-year to 8.3 million units.
In contrast, Apple did not experience the same benefits in the U.S. market as Samsung. This is because Apple has entered into an urgent adjustment of its supply chain from producing iPhones in China to producing them entirely in India, causing a decrease in iPhone supply in the U.S. market. According to Counterpoint Research, the iPhone shipments in the U.S. for the second quarter (13.3 million units) are approximately 11% lower than last year. However, global iPhone shipments increased by 4% compared to the previous year. An industry insider stated, "There are concerns that iPhone prices will rise in the U.S. after August, and this will likely prompt consumers globally to make early purchases of iPhones."
◇ Performance in the second half hindered by tariff-related price hike worries
The issue lies in the performance for the second half of the year. The U.S. government is expected to impose item-specific tariffs rather than mutual tariffs on smartphones. As a result, a 0% tariff rate is currently in effect, but item-specific tariff rates for smartphones are expected to be finalized in the second half. President Donald Trump has previously stated that a 25% tariff would be imposed on smartphone manufacturers if they do not produce goods in the U.S. Moreover, due to the surge in early smartphone purchases concentrated in the first half, it is also anticipated that demand in the second half will not match last year, which is seen as a potential brake on the performance of both Samsung and Apple.
Of course, since there is currently a stockpile of inventory, Samsung and Apple are not immediately raising prices, but the industry believes that a price increase is only a matter of time. On the 6th (local time), Tim Cook, the Apple CEO, stated that he would invest an additional $100 billion (approximately 140 trillion won) in the U.S., which is seen by many as part of the preliminary work to seek tariff exemptions. Apple had previously announced plans to invest $500 billion (approximately 700 trillion won) in the U.S. over the next four years.
Kim Heung-jong, an appointed professor at Korea University and former president of the Korea Institute for International Economic Policy (KIEP), remarked, "In the end, the arms will have to bend inward. The higher tariff rates in India compared to Vietnam and Korea mean that the possibility of the government implementing tariff exemptions specifically for iPhones in order to protect domestic corporations like Apple cannot be ruled out." He added, "Samsung's concerns will inevitably deepen as well." Apple had previously announced a plan for $350 billion (approximately 485 trillion won) in U.S. manufacturing investment over five years during the first term of the Trump administration, and it had received exemptions from tariffs on iPhones produced in China.