Samsung Electronics, the world’s biggest maker of memory chips, is expected to announce a 39% decrease in second-quarter operating profit on Tuesday. This decline is primarily due to delays in supplying advanced memory chips to artificial intelligence chip leader Nvidia.
According to LSEG SmartEstimate, Samsung is projected to report an operating profit of 6.3 trillion won ($4.62 billion) for the April-June period. This would mark its lowest income in six quarters and the fourth consecutive quarterly decline in profits.
Investor concerns have deepened over Samsung’s ability to compete with smaller rivals in developing high-bandwidth memory (HBM) chips for artificial intelligence data centers. While key competitors like SK Hynix and Micron have seen strong demand for memory chips needed for AI, Samsung has faced challenges in the China market where sales of advanced chips have been restricted by the U.S.
Analysts have noted that Samsung’s efforts to get the latest version of its HBM chips certified by Nvidia have been slow, leading to flat revenue in the second quarter. The company has yet to begin supplying its HBM3E 12-high chips to Nvidia, impacting its overall performance in the market.
Despite these challenges, Samsung’s smartphone sales are expected to remain solid, driven by demand ahead of potential U.S. tariffs on imported smartphones. However, the company’s key businesses, including chips, smartphones, and home appliances, continue to face uncertainty from various U.S. trade policies.
The U.S. government is considering revoking authorizations granted to global chipmakers, including Samsung, which could make it more difficult for them to receive U.S. technology at their plants in China. Samsung’s shares have underperformed compared to other major memory chipmakers this year, with a 19% increase in stock value, in contrast to a 27.3% rise in the benchmark KOSPI.
Overall, Samsung Electronics is facing challenges in its memory chip business, but remains resilient in the smartphone market. As the company navigates through trade uncertainties and supply chain disruptions, investors will be closely watching its performance in the coming quarters.
