Samsung's profit more than halves, missing expectations as chip business plunges 94%

Samsung Electronics connected Thursday reported a second-quarter operating nett of 4.7 trillion Korean won ($3.38 billion), missing expectations, weighed by a 93.8% nett slump successful its spot business.

While Samsung's second-quarter operating nett bushed its ain forecast of astir 4.6 trillion won, it was a steep driblet from the 10.44 trillion won recorded successful the aforesaid play past year.

The South Korean exertion elephantine posted a quarterly gross of 74.6 trillion won, up somewhat from 74.07 trillion won a twelvemonth earlier and beating its forecast of 74 trillion won. 

Here are Samsung's second-quarter results compared with LSEG SmartEstimate, which is weighted toward forecasts from analysts who are much consistently accurate:

• Revenue: 74.6 trillion won ($53.5 billion) vs. 74.43 trillion won 
• Operating profit: 4.7 trillion won vs. 5.33 trillion won

Shares of Samsung fell by arsenic overmuch arsenic 1.65% successful trading.

Notably, the company's Device Solutions division, which encompasses its representation chip, semiconductor plan and foundry concern units, reported a 93.8% driblet successful operating nett twelvemonth implicit year.

Samsung Electronics' spot concern posted an operating nett of 400 cardinal won successful the 2nd quarter, plunging from 6.45 trillion won successful the aforesaid play past year. Chip gross fell to 27.9 trillion won, from 28.56 trillion won past year. 

"Inventory worth adjustments successful representation and one-off costs related to the impacts of export restrictions related to China successful non-memory had an adverse effect connected profit," the institution said successful a statement.

However, speaking successful an net call, Samsung's main fiscal serviceman Soon-cheol Park voiced immoderate optimism for the institution successful the adjacent term.

"Despite ongoing planetary economical concerns driven by uncertain commercialized policies and geopolitical tensions, the IT manufacture appears poised for a gradual betterment fueled by expanding momentum successful AI and robotics," helium said.

"In this context, we expect a rebound successful our show successful the 2nd half, pursuing a bottoming retired successful the 2nd quarter, with the net expected to amended steadily arsenic the twelvemonth progresses," helium added.

A Samsung enforcement besides noted that the conclusion of commercialized negotiations betwixt South Korea and the U.S. had helped to trim uncertainties, but that the institution was monitoring further details and Washington's probe into the semiconductor industry that could effect successful caller tariffs.

During the net call, Noh Mi-jung, vice president of Samsung's Foundry business, said the institution anticipates gross betterment successful the 2nd half, driven by the full-scale wide accumulation of its next-generation 2-nanometer mobile chips.

Samsung's foundry concern could besides person a semipermanent boost from a $16.5 cardinal contract to proviso chips to a large institution successful a woody announced connected Monday. 

While Samsung did not initially disclose the counterparty, Tesla CEO Elon Musk has said that it was his American electrical conveyance maker, and that the alleged AI6 chips would beryllium made astatine Samsung's upcoming fab successful Taylor, Texas.  The woody could beryllium adjacent larger than what's been announced, Musk added. 

The main purpose of the Tesla woody for Samsung could beryllium attracting different imaginable customers to its foundry business, Nam Hyung Kim, probe spouse and equity probe expert astatine Arete, told CNBC.

However, "production costs astatine the Taylor tract are expected to beryllium importantly higher than those successful Korea," helium said, adding that it is acold excessively aboriginal to reason the woody volition amended Samsung's presumption against marketplace person Taiwan Semiconductor Manufacturing Company.

Samsung's foundry concern is presently astatine a "critical juncture betwixt endurance and profitability," Neil Shah, vice president of probe astatine Counterpoint Research, said successful a pre-earnings statement.

Samsung, meanwhile, has been dealing with accrued contention successful its representation business, which makes chips utilized to store information successful everything from servers to user devices specified arsenic smartphones and laptops.

The institution has traditionally been the marketplace person successful memory. But that spot is being threatened arsenic it falls down rival SK Hynix successful precocious bandwidth memory, oregon HBM — a benignant of representation utilized for artificial quality computing. 

A report from Counterpoint Research earlier this period recovered that SK Hynix had caught up with Samsung's representation revenues successful the 2nd quarter, with some present vying for the apical presumption successful the planetary representation market. 

In the 2nd fractional of the year, Samsung said it plans to proactively conscionable the increasing request for high-value-added and AI-driven products and proceed to fortify competitiveness successful precocious semiconductors.

Samsung has reportedly been moving to get the latest mentation of its HBM chips certified by AI spot darling Nvidia. However, analysts expect SK Hynix's dominance successful HBM to persist done this year.

Samsung's mobile acquisition and networks businesses, tasked with processing and selling smartphones, tablets, wearables and different devices, reported an uptick in income and profit.

The portion posted an operating nett of 3.1 trillion won for the 2nd quarter, compared to 2.23 trillion won during the aforesaid play past year. 

Consolidated gross for the portion reached 29.2 trillion won, up from 27.38 trillion won past year. 

Samsung said that beardown show was driven by robust income of its Galaxy S25 bid and Galaxy A bid smartphones, arsenic good arsenic its Galaxy tablets.

"In H2 2025, the [mobile acquisition business] plans to proceed a flagship-first attack for smartphone income focusing connected foldables and the Galaxy S25 bid — portion emphasizing the AI functionality of the Galaxy A bid — to summation marketplace share," the institution added.

Earlier this month, Samsung launched 3 caller folding smartphones arsenic the institution looks to support up with offerings from Chinese rivals.

Samsung successfully defended its starring presumption successful the planetary smartphone marketplace successful the 2nd quarter, according to a report from exertion probe steadfast Canalys, present portion of Omdia. Samsung claimed a 19% marketplace stock by portion sales, predominantly acknowledgment to income of its Galaxy A series.

"Moving connected to the 2nd fractional of the year, overall, smartphone request is expected to declaration somewhat twelvemonth connected year, owed to concerns astir rising tariffs successful mature markets and the continued slowdown driven by persistent inflation," said Daniel Araujo, vice president astatine Samsung's Mobile Experience business. 

"However, the premium conception is projected to turn modestly, driven by shifting user preferences toward higher-end products, owed successful portion to economical maturation successful emerging markets," helium added.