Samsung Electronics has issued a grim forecast for the second quarter of 2025, predicting a massive 56% year-on-year drop in operating profit. The South Korean tech giant expects to report 4.6 trillion won ($3.3 billion) in operating income for Q2, down from 10.8 trillion won in the same period last year.
This marks the steepest quarterly decline in earnings for Samsung in over a year, largely driven by U.S. restrictions on advanced semiconductor exports and delayed shipments of its next-gen memory chips to key partners like Nvidia.
Key Reason: U.S. Export Restrictions on AI Chips
The U.S. government’s tightening of export rules on high-performance chips destined for China has directly affected Samsung’s semiconductor business. The company has been a major supplier of memory components to Chinese firms, which are now facing limitations on access to U.S.-designed chip technologies.
This export curb has led to shipment delays and inventory buildup across Samsung’s Device Solutions division, which handles both memory and foundry operations.
Delays in HBM3E Shipments to Nvidia
Another blow came from Samsung’s delay in shipping its highly anticipated HBM3E (high-bandwidth memory) chips to Nvidia. These chips are currently under performance and thermal testing, and Samsung has yet to receive the final qualification approval.
In contrast, rivals like SK Hynix have already secured large orders from Nvidia, giving them a lead in the AI chip race. Samsung has begun some HBM3E shipments to AMD and Broadcom, but the Nvidia gap is significant.
Losses in Foundry Business and Inventory Woes
Samsung’s foundry (chip manufacturing) division has also underperformed due to low capacity utilization and poor demand visibility. Additionally, large-scale inventory write-downs further eroded profits in Q2.
- Decline in orders from fabless clients
- Impact of export controls on chip production planning
- Slower-than-expected rebound in consumer electronics
These factors compounded to weaken Samsung’s broader semiconductor profitability across Q2.
Consumer Electronics Segment Also Pressured
While the spotlight is on chips, Samsung’s consumer electronics business has also taken a hit. A stronger Korean won and global tariff policies—including the latest from the U.S.—have made Samsung’s products less competitive in international markets.
TVs, smartphones, and appliances all saw reduced global demand, further contributing to the profit slump.
Share Buyback and Hope for Recovery
In response to the earnings shock, Samsung initiated a 3.9 trillion won share buyback as part of a previously announced 10 trillion won program. The move aims to boost investor confidence during what is expected to be a transitional quarter.
- Increased demand from Huawei and non-U.S. AI firms
- HBM shipments to Nvidia (if approved) could ramp up in Q3
- Stabilizing export regulations might ease supply chain disruptions
Market Reaction and Industry Response
Samsung’s stock dipped a modest 0.6% following the announcement, reflecting that the market had partly priced in the earnings miss. In contrast, SK Hynix rose 3.3%, continuing its upward trend thanks to robust AI memory demand and earlier delivery to Nvidia.
Chip industry analysts believe Samsung’s Q2 earnings may mark a bottom, but only if the company successfully accelerates AI chip delivery and gains clarity on U.S. policy by late Q3.
Looking Ahead: What to Watch
- July 31, 2025: Full Q2 earnings release with detailed segment performance
- Nvidia Approval: Any signs of HBM3E qualification may trigger a rally
- U.S.–China Chip Policy: Regulatory updates could ease pressure on Korean exports