Samsung Electronics is expected to report a steep 39% drop in second-quarter operating profit, hit by delays in supplying advanced memory chips to AI leader Nvidia. The South Korean tech giant likely earned 6.3 trillion won ($4.62 billion) in April-June, its lowest profit in six quarters, according to LSEG SmartEstimate. The weak performance has raised investor concerns over Samsung’s ability to compete in the high-bandwidth memory (HBM) chip market, crucial for AI data centers.
While rivals SK Hynix and Micron have capitalized on booming AI chip demand, Samsung has lagged due to its reliance on China, where U.S. export restrictions limit sales of advanced semiconductors. Analysts say Samsung’s certification process for its latest HBM3E chips with Nvidia is progressing slowly, delaying potential revenue growth. “Samsung’s HBM shipments to Nvidia this year may remain minimal,” said NH Investment & Securities analyst Ryu Young-ho.
Despite setbacks in AI chips, Samsung has begun supplying its HBM3E chips to AMD, offering a partial offset. Meanwhile, its smartphone business remains resilient, buoyed by preemptive stockpiling ahead of potential U.S. tariffs. However, broader risks loom, including proposed U.S. tariffs on foreign-made smartphones and potential restrictions on chipmakers operating in China.
Samsung’s shares, the worst-performing among major memory chipmakers this year, have risen just 19% in 2024, trailing the KOSPI’s 27% gain. The stock fell 1.9% on Monday, reflecting investor skepticism over its near-term recovery. With AI-driven demand reshaping the semiconductor industry, Samsung faces mounting pressure to accelerate its HBM development and reduce reliance on the constrained Chinese market.
