DuPont (DD) reported better-than-expected first-quarter profits on Friday, driven by higher sales in its electronics segment, which has seen significant growth due to the increasing demand for AI chips. Despite the positive results, the company warned that tariffs could impact its full-year earnings, with an estimated $60 million hit or 10 cents per share in costs.

The impact of U.S. tariffs, a key aspect of President Donald Trump’s trade policies, has forced companies like DuPont to reassess their financial outlooks. While DuPont anticipates some challenges from tariffs, the company maintained its full-year adjusted profit forecast of $4.30 to $4.40 per share, excluding the tariff-related costs.

DuPont also announced plans to spin off its electronics business, which has become the company’s largest revenue driver. The spin-off is expected to occur by November 1, 2025. For the latest quarter, DuPont reported $3.07 billion in total sales, a 4.6% increase year-over-year, with growth in the electronics segment partially offset by flat sales in its industrials division, which will remain part of DuPont following the spinoff.

Sales in DuPont’s electronics segment surged 14% to $1.12 billion, up from $984 million a year earlier. This growth was largely fueled by the boom in AI technologies, particularly in semiconductor applications. The increasing demand for semiconductors, spurred by AI innovations, has benefited DuPont, which provides key materials for semiconductor manufacturing, packaging, and assembly.

Despite a $768 million non-cash impairment charge related to its Aramids reporting unit, DuPont reported an adjusted profit of $1.03 per share for the quarter, exceeding analysts’ expectations of 95 cents per share.

DuPont’s strong performance in its electronics unit demonstrates how the company is capitalizing on the AI-driven semiconductor boom, while its ongoing adjustments due to tariffs and the upcoming spinoff highlight its strategic efforts to navigate changing market dynamics.