Could Samsung's Q2 Operating Profit Drop 56% Due to Chip Issues and US Trade Policies?
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Synopsis
Samsung Electronics has estimated a significant decline in its Q2 operating profit of 55.9% due to weak chip sales and US trade policies. This downturn is expected to improve in the upcoming quarter, raising hopes for recovery amidst challenging market conditions.
Key Takeaways
- Samsung's Q2 operating profit dropped by 55.9%.
- Projected profit for the quarter is 4.59 trillion won.
- Revenue slightly decreased by 0.1%.
- Optimism for recovery in HBM chip sales.
- Anticipated improvements in the semiconductor segment.
Seoul, July 8 (NationPress) Samsung Electronics announced on Tuesday that its operating profit for the second quarter has plummeted by 55.9% compared to the same period last year. This significant decline is attributed to a sluggish chip market and the repercussions of US trade policies, falling short of market forecasts.
The leading manufacturer of memory chips anticipates an operating profit of 4.59 trillion won ($3.4 billion) for the quarter ending in June, a stark decrease from 10.44 trillion won a year prior, as indicated by Samsung Electronics' earnings guidance.
Compared to the previous quarter, operating profit has decreased by 31.2% from 6.69 trillion won.
This operating profit figure is 23.4% lower than the average estimate derived from a Yonhap Infomax survey, which is the financial data firm of Yonhap News Agency.
Revenue has slightly decreased by 0.1% to 74 trillion won. Data regarding net earnings remains unavailable.
In a separate announcement, Samsung Electronics attributed the significant quarter-over-quarter profit drop to inventory restocking and the effects of the US ban on advanced AI chip exports to China.
Looking ahead to the next quarter, Samsung Electronics is optimistic about a recovery in demand and sales for their premium high bandwidth memory (HBM) chips, even amid reports that their HBM products did not meet quality standards set by US AI chip leader Nvidia Corp.
The company stated, “The memory sector experienced a downturn due to one-time costs, including provisions for inventory asset valuation.” The statement added, “However, enhanced HBM products are currently undergoing evaluation and are being shipped to clients.”
Furthermore, it was noted that the non-memory division, including the foundry segment, is likely to see reduced losses in the third quarter, supported by improved utilization rates as demand gradually recovers.
Although Samsung did not provide detailed earnings by division, analysts project that its semiconductor unit achieved an operating profit of approximately 1 trillion won in the first quarter.
Analysts have pointed to weak sales of HBM products, declining NAND flash prices, and a stronger Korean won as the primary factors contributing to Samsung Electronics' disappointing performance in the second quarter.
The introduction of the flagship Galaxy S series smartphone in January, which led to a 10% year-on-year sales increase in the first quarter, had minimal effect on the company's second-quarter outcomes.
Additionally, it is expected that its traditional television and home appliance segments also experienced a decline in profitability due to the impact of US tariffs.
Despite the lackluster results, analysts predict a recovery in the third quarter, driven by an increase in memory chip prices.
“Samsung Electronics’ operating profit seems to have reached its lowest point in the second quarter and is anticipated to show steady improvement,” stated Roh Geun-chang, chief researcher at Hyundai Motor Securities Co., pointing to expected gains in HBM sales.
The company plans to release its final earnings report later this month.
Point of View
It's crucial to recognize the broader implications of Samsung Electronics' substantial profit drop. This trend not only reflects the challenges faced by a major player in the global chip market but also highlights the impact of international trade policies. The anticipated recovery may signal a turning point, making it essential for stakeholders to stay informed on these developments.
NationPress
09/09/2025
Frequently Asked Questions
What caused Samsung's significant drop in Q2 profit?
Samsung's operating profit fell by 55.9% due to weak chip business performance and the adverse effects of US trade policies.
What is Samsung's projected operating profit for Q2?
Samsung estimates its operating profit for Q2 to be 4.59 trillion won ($3.4 billion), down from 10.44 trillion won a year ago.
How does this profit drop compare to previous quarters?
The operating profit has decreased by 31.2% from the previous quarter, which stood at 6.69 trillion won.
What are the expectations for the upcoming quarter?
Samsung anticipates a rebound in demand and sales for its premium HBM chips in the next quarter.
What challenges does Samsung face moving forward?
Key challenges include sluggish HBM product sales, declining NAND flash prices, and currency fluctuations.
