Chip Struggles Send Samsung Profits Plummeting
Samsung's Q2 profit plunges 39% as HBM chip delays hit AI market growth. Stock hits 9-year low amid Nvidia certification struggles.
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Samsung Electronics is expected to forecast on Tuesday that its second-quarter operating profit will plummet 39%, due to delays in supplying advanced memory chips to artificial intelligence chip leader Nvidia.
According to LSEG SmartEStimate, the world's largest memory chip manufacturer is expected to report operating profit of 6.3 trillion won ($4.62 billion) for April-June, its lowest earnings in six quarters and the fourth consecutive quarterly decline.
The prolonged weakness in financial performance has deepened investor concerns about whether the Korean tech giant can catch up with smaller competitors in developing high-bandwidth memory (HBM) chips used in AI data centers.
Its main rivals SK Hynix and Micron Technology have benefited from strong demand for memory chips needed for AI, but Samsung's gains have been constrained as it relies on the Chinese market, where advanced chip sales are restricted by the United States.
Analysts say the company's efforts to get its latest version of HBM chips certified by Nvidia have also progressed slowly.
"HBM revenue may remain flat in the second quarter due to continued sales restrictions in China and Samsung not yet starting to supply its HBM3E 12-stack chips to Nvidia," said Ryu Young-ho, senior analyst at NH Investment & Securities.