Samsung Electronics, a subsidiary of the larger Samsung Group, has reported its operating profit guidance for the second quarter of 2025, and things aren’t looking good. Year-over-year, the company’s profits fell from 10.4 trillion Korean won ($7.6 billion) to just 4.6 trillion KRW ($3.36 billion), a decline of 56%. Consolidated sales largely remained the same at 74 trillion KRW ($54 billion).
It’s important to note that these are still preliminary guidance figures; the full earnings report will come out later this month.
According to Korea Herald, the decline in profits is being driven by a decline in inventory replenishments, US tariffs, and US restrictions on advanced AI chips to China. Samsung is not alone in seeing declining profits; LG shared its preliminary Q2 results yesterday and its profits had roughly been cut in half too.
In a statement, Samsung said that its Device Solutions (DS) division, which includes semiconductors, was the main driver of profit decline. Ryu Young-ho, a senior analyst at NH Investment & Securities who spoke to Reuters, said another blow to Samsung was its delayed shipments of high-bandwidth memory to Nvidia. The analyst said: “For Samsung Electronics, the key issue remains regaining competitiveness ... Everything ultimately comes back to HBM. It will also be difficult to raise prices immediately due to competition, making it challenging to sustain high margins.”
Specifically, competition is fierce from competitors like SK Hynix and Micron. Both of these have benefited from the memory chip demand driven by AI growth in the US. Meanwhile for Samsung, it relies more on China, but US restrictions are stymying it.
Samsung expects somewhat of a recovery in the second half of the year. It said that its foundry business losses should narrow as demand picks up. The company will also buoy investor confidence by doing a buyback of 3.9 trillion won ($2.85 billion) worth of its shares. Samsung has an event planned for July 31 to share more details of its Q2 financial situation.