Samsung Electronics has warned of a sharp 56% drop in its second-quarter operating profit, significantly underperforming market expectations and fueling fresh concerns over the company’s semiconductor recovery strategy amid global chip turbulence.
The tech giant, which holds the title of the world’s largest memory chipmaker, cited U.S. export restrictions on advanced AI chips destined for China as a key factor behind the steep decline. But analysts point to deeper issues, including lagging progress in supplying high-bandwidth memory (HBM) chips to major customer Nvidia.
Samsung had earlier suggested that meaningful advancements on its latest HBM 3E 12-layer chips could be seen by June. However, in its Tuesday update, the company provided no timeline for Nvidia shipments—only stating that improved HBM products were under evaluation and that deliveries were ongoing.
Meanwhile, competitors like SK Hynix and Micron have surged ahead, buoyed by strong U.S. demand for memory chips driven by the rapid expansion of AI technologies. Samsung, by contrast, remains heavily exposed to the Chinese market—where Washington’s export curbs and rising domestic competition are squeezing its edge.
“For Samsung Electronics, the central challenge is regaining technological leadership in HBM. Everything comes back to that,” said Ryu Young-ho, senior analyst at NH Investment & Securities.
The outlook is further clouded by potential new U.S. tariffs that could impact both Samsung’s semiconductor and smartphone segments, putting additional strain on profit margins. “Due to stiff competition, price hikes may not be viable, making it harder to preserve profitability,” Ryu added.
Samsung now expects operating profit for the April–June quarter to come in at 4.6 trillion won ($3.3 billion), far below the 6.2 trillion won average estimate by LSEG SmartEstimate. This marks the company’s weakest quarterly result in 18 months, down from 10.4 trillion won a year ago and 6.7 trillion won in the previous quarter.
The sobering guidance highlights the mounting challenges facing Samsung as it navigates geopolitical headwinds, intensifying competition, and shifting demand dynamics in the global chip market.
