Samsung is forecasting a much worse-than-expected decline in operating profit for the second quarter of 2025. Profits will fall by 56% due to weak sales of artificial intelligence chips amid broader problems with its semiconductor business, Reuters reports.
The South Korean company will report 4.6 trillion won in revenue for the April-June period, down from 6.2 trillion won previously forecast. Samsung blamed the drop on U.S. restrictions on the supply of advanced AI chips to China. Analysts said delays in the supply of high-bandwidth memory (HBM) to NVIDIA were also a problem.
Back in March, Samsung reported significant progress with its latest HBM 3E chips and said they could arrive as early as June, but on Tuesday the company did not provide any updates on NVIDIA's supply, only noting that the memory chips are undergoing customer evaluation.
Against this backdrop, Samsung's main memory competitors, SK Hynix and Micron, are benefiting from demand driven by the rise of artificial intelligence in the United States. Samsung itself is placing greater hopes on China, where there are restrictions on sales from the United States and there is also considerable competition from local companies.
As for the drop in chip profits, Samsung attributed it to inventory adjustments, but did not disclose any other details. Analysts note that unsold HBM chips that were supposed to go to NVIDIA could have contributed to the significant inventory write-down. The semiconductor division's operating profit could be 500 billion won, 90% lower than the same period in 2024.
Meanwhile, the company's overall performance looks more positive. Samsung is expected to generate 74 trillion won in revenue for the second quarter, down just 0.1% from the previous year. This figure was achieved thanks to the mobile business, which, among other things, will help increase profits in the future with the release of the Galaxy Fold 7 and Flip 7.
Samsung beat analysts' expectations for operating profit in the first quarter of 2025, thanks to strong demand for the company's products, sparked by US President Donald Trump's tariffs. Meanwhile, in April, it was reported that South Korea would provide a 33 trillion won ($23 billion) aid package to boost the country's semiconductor business.