SEOUL— Samsung Electronics on Tuesday projected a sharp 55.9% year-over-year drop in its second-quarter operating profit, citing weak performance in its semiconductor business and the effects of U.S. trade restrictions, falling short of market expectations.
The world’s largest memory chip maker estimated an operating profit of 4.59 trillion won ($3.4 billion) for the April-June quarter, down from 10.44 trillion won during the same period last year, according to its earnings guidance. Compared to the previous quarter, operating profit declined 31.2% from 6.69 trillion won.
The figure came in 23.4% below analysts’ average estimate, according to a survey conducted by Yonhap Infomax, the financial data arm of Yonhap News Agency.
Revenue slipped slightly, down 0.1% year-over-year to 74 trillion won. Net income figures were not disclosed in the preliminary report.
In a separate statement, Samsung attributed the steep quarter-on-quarter profit decline to inventory adjustments and the impact of U.S. restrictions on exports of advanced AI chips to China.
Looking ahead, the company expects a recovery in demand and stronger sales of its premium high-bandwidth memory (HBM) chips, despite reports that its HBM products failed to meet quality standards in testing by U.S. AI chip leader Nvidia.
“The memory business saw a decline in performance due to one-off costs, such as provisions for inventory asset valuation,” Samsung said. “However, improved HBM products are currently being evaluated and shipped to customers.”
The company also noted that its non-memory segments, including its foundry business, are projected to reduce losses in the third quarter as factory utilization improves amid gradually recovering demand.
While Samsung did not break down profits by division, market analysts estimate the semiconductor unit earned around 1 trillion won in operating profit in the first quarter.
Industry experts point to weak HBM sales, declining NAND flash prices, and a stronger Korean won as key factors behind the disappointing second-quarter results.
Although the January launch of Samsung’s flagship Galaxy S series smartphone helped boost first-quarter sales by 10% year-over-year, it had little impact on the second quarter. Meanwhile, its traditional TV and home appliance divisions likely experienced a drop in profitability, partly due to U.S. tariffs.
Despite the lackluster performance, analysts expect a turnaround beginning in the third quarter, driven by rising memory chip prices.
“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 growth in HBM chip sales.
Samsung is scheduled to release its full earnings report later this month. (Source: IANS)
