Profit May Hit Six-Quarter Low
South Korea's Samsung Electronics is expected to release its second-quarter results this week, with market forecasts predicting that its operating profit from April to June could fall to 6.3 trillion won (approximately 4.62 billion USD), a roughly 39% year-over-year plunge, marking the lowest level in six quarters. This decline mainly reflects Samsung's intense competitive environment in the global memory chip market, especially amidst slow progress in AI chip certification and supply, missing the chance to seize the rapid growth in demand for AI memory chips.
As the world's largest memory chip supplier, Samsung's profitability fell short of market expectations, raising concerns about its competitiveness in the high-bandwidth memory (HBM) sector, particularly as demand surges in AI data centers and it fails to rapidly scale supply.
Lag in AI Chip Supply Certification
Analysts point out that Samsung's slow progress in supplying the latest HBM chips (HBM3E with 12-layer stacking) to NVIDIA has prevented a revenue breakthrough at a critical time. Ryu Young-ho, an analyst at NH Investment & Securities, says that with ongoing U.S. restrictions on high-end chip exports to China, Samsung's HBM chip revenue in the second quarter may remain flat, and large-scale shipments to NVIDIA this year could be limited.
Although Samsung previously expected substantial progress in AI chips by June, it has yet to confirm whether its chips have fully completed NVIDIA's certification, with only reports showing that it has started supplying AMD.
In contrast, competitors like SK Hynix and Micron have clearly taken the lead in supplying AI server and data center memory chips, benefiting from the global surge in AI computing power demand.
Smartphone Sales Steady but Concerns Remain
Despite pressures on its chip business, Samsung's smartphone segment is relatively stable. Analysts believe rumors of potential U.S. tariffs on imported smartphones have prompted channel pre-stocking, maintaining sales at a good level. However, this sector also faces new external risks: former President Trump had proposed a 25% tariff on non-U.S. made smartphones. If enacted, this could affect Samsung’s cost structure for U.S. exports.
Furthermore, the U.S. government is considering revoking licenses for global chip companies, including Samsung, to use American technology in China. This policy direction adds uncertainty to Samsung's operations in its Chinese factories, potentially impacting its global supply chain and cost structure.
Stock Price Trails Peers, Facing Structural Pressures
Although Samsung's stock price has risen about 19% this year, it still lags behind the 27.3% gain of the Korea Composite Stock Price Index, and noticeably underperforms competitors like Micron and SK Hynix. This indicates skepticism about its profitability and the pace of its AI chip strategy implementation.
Currently, Samsung faces both internal and external pressures: rapidly growing global demand for AI chips, urgent needs for HBM chip certification and large-scale supply, while ongoing U.S.-China trade frictions and uncertainties in U.S. tariff policies continue to impact Samsung's major business global deployment and export environment.
