TLDR: Samsung Electronics is projected to report a 39% decline in its second-quarter operating profit, reaching a six-quarter low of 6.3 trillion won ($4.62 billion). This significant drop is primarily attributed to delays in supplying advanced High-Bandwidth Memory (HBM) chips to AI leader Nvidia and ongoing U.S. trade restrictions impacting sales in the Chinese market. Competitors like SK Hynix and Micron are currently outpacing Samsung in the lucrative AI chip sector.
SEOUL – Samsung Electronics, the global leader in memory chips, is bracing for a substantial 39% plunge in its second-quarter operating profit, according to projections released on Monday. The South Korean tech giant is expected to report an operating profit of 6.3 trillion won ($4.62 billion) for the April-June period, marking its lowest income in six quarters and its fourth consecutive quarterly decline.
The primary catalyst for this steep forecast is the persistent delay in supplying advanced High-Bandwidth Memory (HBM) chips to Nvidia, the dominant force in artificial intelligence (AI) chip development. While demand for AI-related memory chips remains robust, Samsung has struggled to capitalize fully, with rivals such as SK Hynix and Micron gaining significant traction in the market.
Analysts point to Samsung’s slow progress in getting its new 12-layer HBM3E chips certified by Nvidia. Ryu Yong-ho, Senior Analyst at NH Investment & Securities, commented, ‘Samsung’s HBM revenue in Q2 is likely flat as sales restrictions to China remain and Samsung has yet to start shipping 12-layer HBM3E chips to Nvidia.’ He further indicated that significant shipments of these crucial new chips to Nvidia are unlikely to occur this year, despite Samsung’s earlier predictions in March of significant progress by June.
Adding to Samsung’s challenges are the uncertainties surrounding U.S. trade policy, which continue to restrict the company’s access to the vital Chinese market for advanced chip sales. This geopolitical factor has strained Samsung’s chip business, further exacerbating its financial performance.
The prolonged weakness in earnings has deepened investor concerns regarding Samsung’s capacity to catch up with its smaller rivals in the rapidly evolving HBM chip segment, which is critical for AI data centers. Shares of Samsung Electronics slid more than 2% on Monday ahead of the anticipated earnings report, reflecting the cooled investor sentiment.
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Despite the headwinds in its chip division, Samsung’s smartphone sales are expected to maintain strength. This is largely attributed to a surge in inventory as the company prepares for potential future U.S. tariffs on smartphones, indicating a strategic move to mitigate future trade risks.
