Samsung Electronics is expected to report a 39% drop in its second-quarter operating profit on Tuesday, mainly due to delays in supplying advanced memory chips to Nvidia, the leading company in AI chip production.
The South Korean tech giant, which is also the world’s largest memory chip maker, is projected to post an operating profit of 6.3 trillion won (\$4.62 billion) for the April-June quarter, according to LSEG SmartEStimate. This would be Samsung’s lowest quarterly profit in the last six quarters.
The company’s continued weak financial performance has raised concerns among investors about its ability to compete with smaller rivals in the development of high-bandwidth memory (HBM) chips, which are essential for AI data centres.
Competitors like SK Hynix and Micron have seen strong demand for their AI-related memory chips, while Samsung’s progress has been slow due to its heavy dependence on the Chinese market, where sales of advanced chips face restrictions from the United States.
Analysts say that Samsung’s efforts to get its latest HBM chips certified by Nvidia are moving at a slow pace. “HBM revenue likely remained flat in the second quarter, as China sales restrictions persist and Samsung has yet to begin supplying its HBM3E 12-high chips to Nvidia,” said Ryu Young-ho, a senior analyst at NH Investment & Securities.
He added that Samsung’s shipments of the new chip to Nvidia are unlikely to be significant this year. Although Samsung had said in March that it expected meaningful progress on its HBM chips by June, the company has declined to comment on whether its HBM3E 12-layer chips have passed Nvidia’s qualification process.
However, in June, U.S. chipmaker AMD confirmed that Samsung has started supplying the new chip to them.
On the smartphone front, Samsung’s sales are expected to remain steady, helped by stockpiling ahead of possible U.S. tariffs on imported smartphones, analysts noted.
Despite this, many of Samsung’s major businesses, including chips, smartphones, and home appliances, continue to face uncertainty due to various U.S. trade policies. These include former U.S. President Donald Trump’s proposal for a 25% tariff on smartphones made outside the United States and the July 9 deadline for “reciprocal” tariffs against several U.S. trading partners.
In addition, the U.S. government is considering revoking permissions given to global chipmakers, including Samsung, which could make it harder for them to access U.S. technology at their factories in China.
Samsung shares, which have been the weakest performer among major memory chipmakers this year, have risen about 19% so far this year, falling behind the 27.3% increase in the benchmark KOSPI. As of 0447 GMT on Monday, Samsung shares were down 1.9%, while the KOSPI was up 0.3%.
Also read: Viksit Workforce for a Viksit Bharat
Do Follow: The Mainstream formerly known as CIO News LinkedIn Account | The Mainstream formerly known as CIO News Facebook | The Mainstream formerly known as CIO News Youtube | The Mainstream formerly known as CIO News Twitter |The Mainstream formerly known as CIO News Whatsapp Channel | The Mainstream formerly known as CIO News Instagram
About us:
The Mainstream formerly known as CIO News is a premier platform dedicated to delivering latest news, updates, and insights from the tech industry. With its strong foundation of intellectual property and thought leadership, the platform is well-positioned to stay ahead of the curve and lead conversations about how technology shapes our world. From its early days as CIO News to its rebranding as The Mainstream on November 28, 2024, it has been expanding its global reach, targeting key markets in the Middle East & Africa, ASEAN, the USA, and the UK. The Mainstream is a vision to put technology at the center of every conversation, inspiring professionals and organizations to embrace the future of tech.
