Big profit drop awaits Samsung: could be 56% down, much worse than predicted
Yes, they'll do it.
They'll be tempted to do it, but I hope not.
No, prices will stay the same.
Yes, they'll do it.
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They'll be tempted to do it, but I hope not.
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No, prices will stay the same.
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Samsung has announced that its profit for the second quarter of 2025 is expected to drop by 56%, much worse than what experts had predicted. Why? Well, this could be because of weak sales of its high-performance memory chips used in artificial intelligence (AI) devices and services.Samsung is the world's largest maker of memory chips – the tiny silicon components that store information in everything from our beloved smartphones to computers to AI servers. The company said that tighter US rules limiting the sale of advanced AI chips to China may hurt its business. But industry experts say Samsung also lost ground because it has been slow in delivering its latest memory chips, called HBM (high-bandwidth memory), to one of its most important customers, Nvidia – a leader in AI hardware.Back in March, Samsung said it was making good progress on its new HBM3E 12-layer chips and hoped to start shipping them by June. However, the company now says those chips are still being tested by customers and there's no update yet on when Nvidia might use them.Meanwhile, Samsung's competitors, like SK Hynix and Micron, are already cashing in on the AI boom in the US, while Samsung depends more on China – a market where American restrictions and local competition are slowing sales.One analyst, cited by Reuters , said that for Samsung, everything right now depends on catching up in the AI chip race. Without that, it risks falling behind.To make things harder, there is also talk of possible new US tariffs on smartphones and other electronics, which could hurt Samsung's phone business too. Plus, because the competition is so intense, Samsung won't be able to easily raise its prices to boost profits.For the April-June period, Samsung expects to make around 4.6 trillion Korean won (about $3.36 billion when directly converted) in profit. That's down from 10.4 trillion won a year ago, marking its worst earnings in a year and a half. Total sales are expected to stay almost flat at 74 trillion won (around $54 billion).Looking ahead, Samsung hopes things will improve later this year. New smartphone launches, including foldables – that's set for July 9 – could help, along with gradually rising demand for its AI chips from customers beyond Nvidia.Samsung's chip manufacturing business (its foundry) is also facing challenges because of the US restrictions on sales to China and lower production levels. But the company expects this business to lose less money in the second half of the year as demand slowly picks up.
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