Samsung Electronics reported its first profit decline since 2023, highlighting its growing struggles with market share in the AI-driven era.
In the June quarter, the company’s operating profit dropped by a sharper-than-expected 56 per cent, largely due to inventory write downs triggered by U.S. export restrictions on AI chips destined for China.
Samsung’s net profit and revenue
Samsung posted a preliminary operating profit of 4.6 trillion won ($3.3 billion) for the June quarter, marking its lowest since 2023 and falling short of analysts’ expectations.
Revenue remained steady at 74 trillion won. A complete financial report, including net income and a breakdown by divisions, will be released later this month.
These underwhelming earnings reveal how South Korea’s tech giant has lost ground in the AI memory chip space to SK Hynix Inc., particularly amid the surge in demand after ChatGPT’s rise. SK Hynix and Micron Technology Inc. have taken the lead in supplying advanced high-bandwidth memory chips used alongside Nvidia’s AI processors.
Meanwhile, Samsung’s efforts to revive its loss-making chip foundry business are being hampered by ongoing U.S. restrictions on tech exports to China.
Samsung reported a decline in profit after its foundry division, which partially depends on demand from China, incurred a one-time inventory charge due to unsold AI chips.
The company also noted a drop in utilization rates, addressing the weaker-than-expected results in a rare statement. However, Samsung expects operating losses in its contract chipmaking segment to shrink in the second half of the year as demand slowly recovers.
Despite prevailing concerns, shares of Samsung Electronics edged up by 0.4%, compared to a 1.5 per cent rise in the benchmark KOSPI as of 0030 GMT. The company announced plans to repurchase shares worth 3.9 trillion won ($2.85 billion), as part of a 10 trillion won buyback program unveiled in November.
The company plans to release detailed results including a breakdown of earnings for each of its businesses on July 31.
(With inputs from agencies)
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
