Samsung Electronics said Tuesday it expects a 56% drop in second-quarter operating profit, signaling continued pressure on the South Korean tech giant's core semiconductor business due to U.S. export controls, weak AI chip sales in China, and delayed shipments to key customer Nvidia.
The world's largest memory chipmaker projected operating profit of 4.6 trillion Korean won ($3.3 billion) for the April-June period, down sharply from 10.4 trillion won a year earlier and missing the 6.2 trillion won LSEG SmartEstimate. Revenue is expected to remain flat at 74 trillion won, according to preliminary guidance.
Samsung attributed the shortfall in part to a decline in semiconductor performance driven by "inventory value adjustments." Analysts believe the company may have faced writedowns from unsold high-bandwidth memory (HBM) chips initially slated for Nvidia, a key customer that has recently turned to rivals like SK Hynix and Micron.
"For Samsung Electronics, the key issue remains regaining competitiveness," said Ryu Young-ho, senior analyst at NH Investment & Securities. "Everything ultimately comes back to HBM."
Samsung had previously signaled progress on its advanced HBM3E 12-layer chips and suggested shipments could begin in June. On Tuesday, the company said only that improved HBM products are under customer evaluation and shipping, without naming Nvidia.
Washington's ongoing restrictions on AI chip exports to China have significantly impacted Samsung, which has greater exposure to the Chinese market compared with U.S. rivals. New U.S. tariffs set to take effect August 1-including a 25% tax on South Korean and Japanese imports-have further complicated Samsung's outlook.
"Samsung Electronics' recent struggles continued as it warned on profit," said AJ Bell investment analyst Dan Coatsworth. "The company has been heavily impacted by U.S. restrictions on the sale of AI chips to China."
