Samsung Electronics projected to report 39% drop in Q2 profit due to weak AI chip sales

Samsung Electronics is expected to report a 39% drop in second-quarter operating profit due to delays in supplying memory chips to Nvidia. Its projected operating profit is 6.3 trillion won, the lowest in six quarters. Investor concerns grow as Samsung struggles to catch up with rivals in AI chip development.

Rivals SK Hynix and Micron benefit from robust demand for memory chips for AI, while Samsung faces challenges in the China market due to sales restrictions. Efforts to get the latest HBM chips certified by Nvidia are slow. Analysts predict flat HBM revenue in the second quarter.

Samsung’s shipments of new chips to Nvidia are unlikely to be significant this year. The company has started supplying the chip to AMD, but progress with Nvidia remains unclear. Smartphone sales are expected to remain strong amidst potential U.S. tariffs on imported smartphones.

Samsung’s key businesses face uncertainty from various U.S. trade policies, including tariffs on non-US-made smartphones and threats of “reciprocal” tariffs. The U.S. may revoke authorizations for global chipmakers, including Samsung, impacting technology access in China. Samsung’s stock performance lags behind major chipmakers.

Despite challenges, Samsung’s shares have risen 19% this year, underperforming the KOSPI. The company faces ongoing obstacles in chip supply to Nvidia and uncertainties from U.S. trade policies. Investors monitor Samsung’s progress in AI chip development and smartphone sales amidst global trade tensions.

Read more at Yahoo Finance: Samsung Elec Q2 profit likely to drop 39% on weak AI chip sales