The lack of macroeconomic improvements in the supply chain from 2024 combined with the risks followed by the Trump Administration’s tariff policy is promoting a new shipment outlook for 2025. And it isn’t in a positive direction as several end-device markets like AI data centers, AI servers, smartphones and notebooks are likely to shift downward, according to new data from market research firm TrendForce.
While shipments of these devices in the first quarter were up, these were driven by advancing shipments to the U.S. ahead of tariffs, TrendForce said. Simultaneously, consumer electronics supply chain vendors are weighing how to absorb increased production costs and if they will pass it along to the consumer.
Revised scenarios
TrendForce had two likely revised forecast scenarios. In the positive case, there will likely be some secure exemptions for complete systems or finished products. In the worst case, retaliatory tariffs from other countries increase the trade war and U.S. value is defined based on the manufacturing location. This could significantly increase the chances of a market contraction, TrendForce said.
Even in the positive scenario, AI servers, servers, smartphones and notebooks will suffer a drop of 1% to 2%. In the worst-case scenario, these sectors drop by 6% or more.
For AI servers, the positive case assumes some tariff relief will happen in the U.S. and Mexico. However, given the geopolitical and economic uncertainty, OEMs may adopt a very cautious approach. In the worst case, tariffs could trigger global inflations and erode consumer spending, significantly reducing growth of AI servers.
Non-AI servers are likely to be constrained by corporate reduction in capital expenditure leading to IT budget cuts in the second half of 2025. That’s the good scenario. The bad scenario is a global supply chain facing higher costs and investment hesitancy driving server growth significantly downward, TrendForce said.
Smartphones
The smartphone market was already on a path that would be at best modest growth in 2025. Now, the tariffs in the best case scenario will see the smartphone market flat at best. The worst case scenario is a production decline by as much as 5% year-over-year, TrendForce said.
PCs
Meanwhile, TrendForce adjusted its forecast for notebooks and PCs with the forecast in the best scenario growing by 3% and in the worst case only growing by 2%.
The U.S. brands mostly have assembly operations in Southeast Asia, this will likely mean tariffs will impact PC costs and suppress both consumer and commercial upgrade demand in 2025.
