Samsung share price dips: Earnings miss to Trump tariffs — key reasons behind the fall explained
Additionally, US President Donald Trump levied a 25% tariff on South Korea, further clouding the outlook for the stock.
Samsung, one of the world's largest makers of memory chips, reported a preliminary operating profit of 4.6 trillion won in the June quarter — the company's lowest since 2023 and short of analysts' projections, as per a Bloomberg report. The revenue was flat at 74 trillion won.
The company will provide a full financial statement with net income and divisional breakdowns later this month.
Samsung reported a drop in profit after its foundry division, partly dependent on Chinese demand, incurred a one-time inventory charge for unsold AI chips. The company also noted a decline in utilisation rates, explaining the weaker-than-expected performance in an unusual statement. However, Samsung expects operating losses in its contract chipmaking business to narrow in the second half of the year, citing a gradual recovery in demand.
Samsung lost its leadership in the AI market to rival SK Hynix Inc. Its longstanding rival — along with Micron Technology Inc. — now sells more of the cutting-edge high-bandwidth memory chips paired with Nvidia Corp.'s AI accelerators, the Bloomberg report said. What's worse, the problem for Samsung has been compounded by the US restrictions on tech exports to China, thus slowing a turnaround in its chipmaking operation.
"Samsung's operating profit dropped by a sharper-than-expected 56% due to inventory write-downs triggered by US export restrictions on AI chips destined for China. Trump's tariff policy had a significant impact on the company's performance," said capital market expert Anuj Gupta.
He said that given growing macroeconomic uncertainties due to recent global trade tensions and slowing global economic growth, it is difficult to predict future performance. Due to the festival season in India, we expect its performance to improve in the second half of the year and expect an increase in demand growth, Gupta added.
Samsung share price declined over 1% to 61,000 KRW from its last closing price of 61,700 KRW.
"Last year, prices corrected by 32.23%. Currently, it has strong resistance at 65000krw and support at 57300krw. We are expecting the price to go down. Traders can use buy-on dips as prices are traded in an oversold zone," Gupta advised.
Meanwhile, Anshul Jain, Head of Research at Lakshmishree Investments said that Samsung Electronics' share price has been trading in a wide 240-week range between 85,000 and 49,000 South Korean Won (KRW), recently rejecting the lower end of this range and forming a promising double bottom setup.
This, he said, signals a potential preemptive reversal with a solid base.
"A sustained move above 62,000 KRW per share will likely propel the stock towards 71,000 KRW apiece, and if momentum persists, a test of 85,000 KRW per share could be in sight. The substantial accumulation at the range lows suggests buyers are defending this zone aggressively. Only a close below 48,000 KRW per share can damage this structure, which currently looks unlikely given the price," Jain opined.
(With inputs from agencies)
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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