South Korean tech giant Samsung Electronics has forecast a sharp drop in its second-quarter profits for 2025, indicating challenges in tapping into the booming artificial intelligence (AI) semiconductor market.
The company expects its operating profit to fall to around 4.6 trillion Korean won, down from 10.44 trillion won a year earlier, missing analyst expectations of 6.26 trillion won.
Samsung’s difficulties are most pronounced in its semiconductor division, especially in producing high-bandwidth memory (HBM) chips used in AI processors. While Samsung remains a major player in smartphones and memory chips, it is losing ground to rivals like SK Hynix and Micron in the advanced HBM segment.
“The disappointing earnings are due to ongoing operating losses in the foundry business, while the upside in the high-margin HBM business remains muted this quarter,” said MS Hwang, research director at Counterpoint Research.
A key issue is Samsung’s delayed certification of its latest HBM chips by Nvidia, which controls about 70% of global HBM demand. Local reports indicate this certification has been postponed until at least September.
Ray Wang from Futurum Group noted, “Given that Nvidia accounts for roughly 70% of global HBM demand, the delay meaningfully caps near-term upside.” Although Samsung has secured some AI memory supply contracts with AMD, these are unlikely to impact the current quarter due to production timing.
Samsung’s foundry business also faces stiff competition from Taiwan Semiconductor Manufacturing Company amid weak orders. To cope, Samsung has reportedly cut up to 30% of staff in some divisions as part of cost-saving efforts.
Despite these hurdles, Samsung’s shares have risen about 16% this year. The company plans to release its detailed third-quarter results later this month, which will shed light on its efforts to regain momentum in the competitive AI chip market.