The second quarter performance outlook for domestic component companies highly dependent on Apple, including LG Display and LG Innotek, has become uncertain. The second quarter is traditionally a seasonal off-peak period without new product launches, and concerns over tariffs from Donald Trump have led clients to secure inventory earlier in the first quarter. As President Donald Trump stated that tariffs on Apple are also included, concerns about pressure to reduce prices remain.
According to financial information provider FnGuide on the 26th, LG Display is expected to record an operating loss of 71.7 billion won in the second quarter of this year. While the loss is projected to shrink compared to the same period last year (operating loss of 93.7 billion won), it has grown larger compared to the forecast from a month ago (operating loss of 44.4 billion won). During the same period, LG Innotek's operating profit forecast is 73.3 billion won, which is expected to decrease by about 51% compared to the same period last year (151.7 billion won). Last year, LG Display and LG Innotek's sales related to Apple accounted for 54% and 81%, respectively.
Amid concerns over the high tariffs of the Trump administration, clients securing quantities in the first quarter is expected to negatively impact the second quarter performance of component manufacturers. Kim Jong-bae, a researcher at Hyundai Motor Securities, noted, "Considering the reduction in order quantities due to proactive inventory accumulation against the tariff impact in the first quarter and the seasonal off-peak period before new model launches, it is inevitable that LG Display's performance will decrease in the second quarter." Kim Min-kyung, a researcher at Hana Securities, stated, "It is expected that the revenue and operating profit of LG Innotek's optical solutions sector will decrease by 31% and 75%, respectively, compared to the previous quarter due to the proactive 'pull-in' effect in anticipation of the tariff imposition."
The issue is that, contrary to expectations that tariffs on Apple may be exempt, Trump's firm stance has led to ongoing concerns. After announcing the high-tariff policy last month, President Trump mentioned that in consideration of the damage to the country, smartphones and semiconductors would be excluded from mutual tariff imposition.
However, President Trump has stated his intention to impose a minimum 25% tariff on smartphones produced overseas by Apple and others. On the 23rd (local time), in a post on Truth Social, President Trump remarked, "I have long told Apple CEO Tim Cook that I hope iPhones sold in the U.S. are manufactured in the U.S., not in India or other countries," adding, "If this plan is not implemented, Apple will have to pay a minimum 25% tariff."
Since 90% of Apple iPhones are produced in China, if Trump's high-tariff policy is enforced, component companies will inevitably suffer. With tariffs increasing manufacturing costs, Apple will have no choice but to implement measures to defend its profitability, such as raising product prices. There is a high likelihood that they will demand price reductions from component suppliers to alleviate the burden of rising costs. Kim noted, "There are concerns in the market about demand slowdown and price pressure due to tariffs."
However, since the reciprocal tariff of 145% originally planned for the Chinese region has been significantly lowered due to negotiations with the Chinese government, there remains hope that tariffs on Apple may be exempt depending on the outcomes of future negotiations. During high-level trade talks held between the U.S. and China in Geneva, Switzerland, on the 10th and 11th, both countries agreed to lower mutual tariffs to 30% for 90 days.
An industry insider noted, "Although President Trump has repeatedly expressed a tough stance to transfer production bases of companies like Apple and Samsung Electronics to the U.S., if the tariffs are implemented, ultimately, domestic corporations and citizens will inevitably suffer." They added, "Apple may announce plans to establish production bases to avoid tariffs, and the possibility of a dramatic exception to the tariffs cannot be ruled out."