Samsung predicts a drop in second-quarter profit of more than 50% amid the struggle for the AI chip market

South Korean company Samsung Electronics on Tuesday released a preliminary profit forecast for the second quarter of 2025, according to which operating profit will decrease by 56% compared to the same period last year. The reason was the lag in competition with the leaders of the market of chips for artificial intelligence, primarily with Nvidia.

Samsung expects operating profit for the quarter ended June to be around 4.6 trillion won. A year earlier, the figure was 10.44 trillion won. This data was significantly lower than the SmartEstimate from LSEG, which takes into account the most accurate forecasts of analysts — according to it, a profit of 6.26 trillion won (approximately \$4.57 billion) was expected.

The company's revenue was also lower than expected at 74 trillion won, compared to SmartEstimate's forecast of 75.55 trillion won.

After the forecast was published, Samsung Electronics shares fell 1.13% in early trading on Tuesday.

Samsung remains one of the leading smartphone manufacturers and one of the world's largest manufacturers of memory chips that are used in laptops, servers, and other devices. However, the company faced a number of challenges.

Samsung said in a statement that earnings were negatively impacted by a revaluation of inventory values and U.S. restrictions on shipments of advanced AI chips to China.

In addition, Samsung is lagging behind competitors such as SK Hynix and Micron in the high-speed memory (HBM) segment, a key technology for chips focused on artificial intelligence tasks. SK Hynix has already become the main supplier of HBM chips for Nvidia.

Samsung is reportedly still working on getting Nvidia certification for its new version of HBM memory, but local sources say the process has been delayed until at least September.

The company declined to comment on the status of its agreements with Nvidia, but confirmed that improved HBM products are undergoing customer testing and have already started shipping.

According to Ray Wang, director of Semiconductor and Emerging Technology Research at Futurum Group, Samsung has not yet qualified Nvidia for its most advanced HBM memory.

"Given that Nvidia generates about 70% of global demand for HBM, the delay severely limits Samsung's short-term prospects," he said. Despite the fact that Samsung has already started delivering HBM for AMD AI processors, this contract is likely to have no impact on the results of the second quarter due to the late start of production.

In parallel, the company's custom chip manufacturing (foundry) business is facing weak orders and stiff competition from TSMC, the Taiwanese giant in contract semiconductor manufacturing.

Earlier it was reported that in September, Samsung instructed its foreign divisions to reduce up to 30% of staff in some departments.

Despite the current slowdown, Samsung Electronics shares are up more than 16% year-to-date, according to LSEG data. The company will publish a detailed financial report for the second quarter at the end of July.