Samsung Forecasts 56% Profit Drop: AI Chip Sales Lag, HBM Deliveries to Nvidia Delayed

Samsung Electronics has forecast a 56% decline in operating profit for the second quarter of 2025—a figure significantly below analysts’ expectations. The company attributes the drop primarily to tepid sales of chips designed for artificial intelligence systems, a development that has intensified investor concerns over the South Korean tech titan’s ability to regain ground in the competitive semiconductor sector.

As the world’s largest manufacturer of memory chips, Samsung linked the revenue slump to U.S. government restrictions on the export of advanced AI chips to China. However, analysts have pointed to another critical issue: delays in the delivery of high-bandwidth memory (HBM) chips to Samsung’s key American partner, Nvidia.

Back in March, Samsung officials announced substantial progress in developing new 12-layer HBM3E chips, with initial shipments expected by June. Yet the company has now stated only that the products are undergoing customer evaluation and have begun shipping—without specifying any details about its collaboration with Nvidia.

Amid Chinese export controls and rising competition from domestic rivals, Samsung’s position appears increasingly vulnerable. While SK Hynix and Micron have benefited from sustained memory demand in the U.S., Samsung remains heavily reliant on the Chinese market, where stringent export restrictions are in place.

According to analysts at NH Investment & Securities, the company’s principal challenge is to restore its competitive edge—an effort in which HBM chips play a central role. Additional headwinds include the threat of U.S. tariffs, which could exert further pressure on Samsung’s chip and smartphone earnings. However, raising product prices to offset these losses may prove difficult in an intensely competitive market.

Preliminary estimates suggest that Samsung’s operating profit from April to June will reach 4.6 trillion won ($3.3 billion), far below the 6.2 trillion won ($4.5 billion) projected by analysts. This would mark the company’s weakest quarterly performance in the past 18 months and a sharp decline from the first quarter of the year. Revenue is expected to remain largely flat, with only a marginal decrease of 0.1%.

Samsung has also noted that part of the decline in its semiconductor division’s profitability stems from inventory valuation adjustments. Analysts speculate that a substantial portion of these write-downs may be tied to unsold HBM chips originally intended for Nvidia. Revenue from the chip division could plummet by more than 90%, falling to just 500 billion won ($366 million). On a more optimistic note, analysts believe the mobile division may have posted a profit increase during the same period.

Shares of Samsung Electronics slipped by 0.2%, despite a 1.2% gain in the KOSPI index. Nevertheless, the company announced a 3.9 trillion won ($2.8 billion) share buyback as part of a repurchase program initiated in November of last year.

Samsung remains hopeful that the situation will gradually improve, driven by the launch of new smartphone models and the expansion of HBM chip sales to clients beyond Nvidia. Still, the downturn in its custom chip manufacturing business persists, due to export controls targeting China and reduced capacity utilization. Even so, the company anticipates narrowing losses in this segment in the second half of the year as demand begins to recover.