Concerns are growing that the second Trump administration’s tariff policy could heighten pressure on smartphone component suppliers, as the United States imposes steep reciprocal duties on countries where Samsung Electronics and Apple manufacture the bulk of their smartphones. Industry experts warn that with higher production costs and limited room to raise retail prices, device makers are expected to push suppliers for steep price cuts.
As of Apr. 7, industry officials say companies including Samsung Display, LG Display, Samsung Electro-Mechanics, and LG Innotek—which supply key components such as display panels and camera modules to Samsung and Apple—are likely to face intensified pricing pressure. Samsung’s Galaxy series incorporates display panels from Samsung Display, along with camera modules and multilayer ceramic capacitors (MLCCs) from Samsung Electro-Mechanics. Apple’s iPhone models are equipped with display panels from both Samsung Display and LG Display, camera modules from LG Innotek, and MLCCs from Samsung Electro-Mechanics.
“Trump’s tariff move had been anticipated for some time, but the official rollout effectively closes off indirect export routes that companies had been preparing as alternatives,” said Nam Sang-uk, a senior researcher at the Korea Institute for Industrial Economics and Trade. “Smartphone makers will inevitably face greater cost burdens, and since they can’t fully pass those on to consumers, they will likely demand price cuts from component suppliers.”
On Apr. 2, the U.S. government unveiled a 10 percent flat tariff on all imports, alongside a set of reciprocal tariffs targeting more than 60 countries at varying rates. According to the list released by U.S. authorities, Vietnam faces the highest rate at 46 percent, followed by Thailand (36 percent), China (34 percent), Indonesia (32 percent), Taiwan (32 percent), Switzerland (31 percent), India (26 percent), South Korea (25 percent), Japan (24 percent), and the European Union (20 percent).
Component makers typically supply parts to countries where smartphones are assembled. For example, suppliers to Samsung ship components to its manufacturing hubs in Vietnam and India. Similarly, companies that supply Apple send parts to Foxconn’s iPhone assembly plants in China and Taiwan. As such, the components themselves are unlikely to be directly subject to U.S. tariffs, given that most are not exported directly to the American market.
However, manufacturers like Samsung and Apple—whose final products are assembled in high-tariff countries and then shipped to the U.S.—cannot avoid the added costs. “Component makers may not be directly affected by the tariffs, but the closure of indirect export routes removes a key method of circumventing them,” said an industry insider.
For South Korean parts suppliers, many of which are highly reliant on orders from Samsung and Apple, potential price reductions could deal a blow to profitability. Samsung Electro-Mechanics derives 29 percent of its sales from Samsung. Apple accounts for 54 percent of LG Display’s revenue and 81 percent of LG Innotek’s. Samsung Display’s combined revenue from Samsung and Apple is estimated to exceed 80 percent.
Some market observers have floated the possibility that Trump could exempt Apple—a U.S.-based company—from the tariff rules. During his first term in 2019, Trump granted Apple a tariff exemption on iPhones assembled in China after Chief Executive Officer Tim Cook personally appealed for relief. Still, Nam noted that the current administration appears more resolute. “While Apple has previously secured an exemption, the Trump administration’s current stance on tariffs appears firmer than ever, making the outcome difficult to predict,” he said.
