According to the latest financial forecasts, Samsung Electronics released its expected operating profit for the second quarter on Tuesday, which is expected to drop by a significant 56%. The company predicts that the operating profit for the quarter ending in June will be approximately 4.6 trillion KRW (about 4.6 billion USD), compared to 10.44 trillion KRW in the same period last year. This figure is far below the smart estimate from LSEG, which predicted an operating profit of 6.26 trillion KRW for Samsung.
In addition, Samsung also forecasted that its revenue for the second quarter will reach 74 trillion KRW, lower than LSEG's forecast of 75.55 trillion KRW. This news caused Samsung Electronics' stock to fall by 1.13% in the early trading session.
As a leading player in the global smartphone market and one of the world's largest memory chip manufacturers, Samsung faces pressure from competitors. In a statement, the company said that the decline in profits was influenced by inventory value adjustments and the U.S. restrictions on advanced AI chips to China. At the same time, Samsung has gradually fallen behind competitors such as SK Hynix and Micron in the high-bandwidth memory (HBM) chip sector.
MS Hwang, Research Director at Counterpoint Research, stated, "Disappointing performance stems from continuous losses in the foundry business, and the growth of the high-profit HBM business this quarter has been weak." Currently, SK Hynix has become a major supplier to Nvidia, while Samsung's plan to obtain certification for its latest version of HBM chips has been delayed until at least September.
Although Samsung has not commented on the progress of its deal with Nvidia, it stated that its improved HBM products are undergoing customer evaluation and shipment. Ray Wang, Director of Semiconductor, Supply Chain, and Emerging Technologies Research at Futurum Group, pointed out that Samsung has not yet passed Nvidia's certification for its most advanced HBM, and Nvidia accounts for 70% of global HBM demand. This delay limits Samsung's growth potential in the near term.
Additionally, Samsung's chip foundry business continues to face weak orders and intense competition from Taiwan Semiconductor Manufacturing Company. Media reports indicate that Samsung has instructed its global subsidiaries to lay off 30% of staff in some departments. Despite these challenges, Samsung Electronics' stock has risen more than 16% year-to-date. The company will release its detailed third-quarter financial results at the end of this month.
Key Points:
🌐 Samsung expects a 56% decline in operating profit for the second quarter, below market expectations.
📉 The company is facing impacts from inventory adjustments and U.S. restrictions on AI chips to China.
🤖 Growth in high-bandwidth memory business is sluggish, with competitors performing better.