SEOUL, July 8 — Samsung Electronics today projected a far worse than expected 56 per cent plunge in second-quarter operating profit due to weak AI chip sales, deepening investor concerns over the tech giant's ability to revive its struggling semiconductor business.
The world's biggest memory chipmaker blamed the profit miss on US restrictions on advanced AI chips for China, but analysts said the decline was also due to delays in supplying high-bandwidth memory (HBM) chips to key US customer Nvidia.
In March, Samsung flagged meaningful progress on its latest HBM 3E 12-layer chips could come as early as June. But today it gave no update on supply to Nvidia, only saying its improved HBM products were undergoing customer evaluation and proceeding with shipments.
Key rivals SK Hynix and Micron have benefited from robust demand for memory chips driven by AI growth in the United States, but Samsung relies more on China, where sales of advanced chips are restricted by the US and competition with local rivals is growing.
"For Samsung Electronics, the key issue remains regaining competitiveness ... Everything ultimately comes back to HBM," said Ryu Young-ho, a senior analyst at NH Investment & Securities.
Potential US tariffs also cloud the outlook for Samsung's mainstay chip and phone businesses, pressuring margins.
"It will also be difficult to raise prices immediately due to competition, making it challenging to sustain high margins," Ryu said.
Despite the concerns, Samsung Electronics shares rose 0.4 per cent versus a 1.5 per cent gain in the benchmark KOSPI. It said it plans to buy back 3.9 trillion won (RM12.2 billion) worth of its shares, part of a 10 trillion won buyback announced last November.
Analysts said they expect Samsung's profit to improve gradually, supported by the launch of new phones and growth in sales of HBM chips to non-Nvidia customers.
The company plans to release detailed results including a breakdown of earnings for each of its businesses on July 31.
— Reuters
