Samsung earnings slump: Profit may tumble 56% in Q2; AI chip curbs and foundry woes bite

Samsung Electronics expects its second-quarter operating profit to plunge by more than half, as US export restrictions on advanced AI chips to China and underperforming foundry operations weigh on the tech giant's earnings. In a regulatory filing on Tuesday, the company projected April–June profits of 4.6 trillion won ($3.3 billion), marking a steep 56 per cent decline from the same period last year and a 31 per cent drop from the previous quarter.The figure also fell significantly below market forecasts, coming in 23.4 per cent lower than the average estimate, reported AFP, citing South Korea’s Yonhap news agency. Sales for the quarter are expected to hit 74 trillion won, barely changed from last year, but down 6.5 per cent from Q1.While the company did not reveal net income or a segment-wise breakdown, it attributed the underwhelming performance primarily to its chip division. “Profit fell quarter-on-quarter due to inventory value adjustments and the impact of US restrictions on advanced AI chips for China,” Samsung said in a separate release.Washington has intensified curbs on exporting cutting-edge semiconductor technology to Beijing, citing concerns over their potential military applications. These restrictions have left Samsung’s high-tech chip facilities underutilised, pushing down profitability.Analysts also highlighted a broader slowdown in Samsung's foundry business. “The sharp profit and revenue drop is attributed primarily to the weak foundry business, while the performance of the memory business stayed relatively stable,” Tom Hsu of TrendForce was quoted as saying by AFP.Despite the slump, Samsung offered a more optimistic outlook for the latter half of 2025. The firm expects to narrow losses as factory utilisation improves and demand recovers. "Memory chip prices and shipments are expected to rise, thanks to strong demand from AI and data centres," Hsu added.Still, performance from Samsung’s prized HBM (high-bandwidth memory) chips — crucial for advanced AI processing — underwhelmed in the June quarter. “HBM likely fell short of expectations,” said Chae Min-sook of Korea Investment and Securities, adding that falling NAND flash prices for data storage likely widened losses further, as per AFP.Chae also noted that the weakening Korean won against the dollar in June may have dented both sales and operating profit.The company’s woes come amid mounting trade tensions with the United States. US President Donald Trump has warned Seoul of 25 per cent tariffs and demanded global tech firms, including Samsung and Apple, shift manufacturing to the US. South Korea, already facing levies on steel and autos, said it is maintaining “close communication” with Washington to avoid fresh duties.