Samsung Electronics sees 56% drop in Q2 operating profit due to chip slump, US tariffs

Seoul, [South Korea], July 9 (ANI): Samsung Electronics announced its second-quarter operating profit dropping by nearly 56 per cent compared to the same period last year, largely due to a downturn in its semiconductor business and the impact of U.S. trade restrictions, as reported by the Korea Herald.

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The company reported an estimated operating profit for the April-June quarter at 4.59 trillion won (USD 3.4 billion), down sharply from 10.44 trillion won a year ago, and 31.2 per cent lower than the previous quarter's figure of 6.69 trillion won.

This result fell short of market expectations by over 23 per cent, according to data from Yonhap Infomax, the financial data firm of Yonhap News Agency. According to the Korea Herald, the revenue remained relatively flat, decreasing by just 0.1 per cent to 74 trillion won.

While net earnings were not available, Samsung pointed to one-off costs like inventory valuation adjustments and the U.S. export ban on advanced AI chips to China as major contributors to the decline.

The company's memory chip segment was particularly affected, though it noted that upgraded high bandwidth memory (HBM) products are now being evaluated and delivered to customers.

Despite concerns that its HBM chips failed to meet Nvidia's quality standards, Samsung expects demand and sales for premium memory chips to pick up in the next quarter. The company also highlighted improvements in its non-memory divisions, especially its foundry segment, where rising utilisation rates are expected to reduce losses amid a slow market recovery.

"Samsung Electronics' operating profit appears to have bottomed out in the second quarter and is expected to show gradual improvement," said Roh Geun-chang, chief researcher at Hyundai Motor Securities, citing anticipated gains in HBM sales.

Additionally, the success of the Galaxy S series smartphone launch earlier in the year did little to boost Q2 results, and its home appliances and television businesses also reportedly suffered from U.S. tariff pressures. (ANI)

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