Samsung Electronic Q2 profit likely to drop on Nvidia chip delay

Samsung Electronics is expected to report a 39% decline in second-quarter operating profit, with analysts forecasting 6.3 trillion won (US$4.62 billion) for April to June.

This marks its lowest income in six quarters and the fourth straight quarterly drop, mainly due to delays in supplying advanced memory chips to Nvidia.

The company has struggled with developing and certifying its HBM3E 12-layer chips, which are used in AI data centers.

While SK Hynix and Micron have seen stronger chip demand, Samsung’s progress has been slowed by US restrictions on chip sales to China.

Shipments to Nvidia are unlikely this year, though the chip has begun shipping to AMD since June.

Smartphone sales remain steady, helped by stockpiling ahead of potential US tariffs. However, trade policy uncertainties continue to pose risks.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Samsung’s historical pattern of resilience after major setbacks

Samsung’s current challenges with HBM chips mirror previous business crises that the company successfully navigated.

In 2017, Samsung achieved a record operating profit of KRW 53.65 trillion ($50 billion) after recovering from the Galaxy Note 7 recall crisis that had significantly impacted its business performance1.

This recovery demonstrated Samsung’s ability to rebound, with approximately two-thirds of those record profits coming from the semiconductor business, which achieved an operating profit of KRW 35.2 trillion ($32.83 billion)1.

The company has previously shown its capacity to pivot strategically, as seen when it projected an operating profit of KRW 14.5 trillion for Q3 2017, marking the largest quarterly profit in the company’s history at that time, following the Note 7 setback2.

Samsung’s past resilience suggests potential for recovery from current HBM certification delays, though the AI chip market presents unique competitive challenges compared to previous obstacles.

2️⃣ Market leadership shifts in memory segment driven by AI-specific products

SK Hynix’s overtaking of Samsung in DRAM market share (36% vs. 33.7%) represents a significant shift in a segment Samsung has historically dominated3.