Samsung Q2 Profit Plunges 55% Amid AI Chip Slowdown and China Export Curbs

Seoul– Samsung Electronics, the world’s largest memory chip manufacturer, reported a steep 55% decline in second-quarter operating profit on Thursday, as geopolitical tensions and weak demand for high-end chips continue to weigh heavily on its core semiconductor business.

For the April-June 2025 period, the South Korean tech giant posted an operating profit of 4.7 trillion Korean won (approximately $3.37 billion), falling sharply from the 10.3 trillion won it earned during the same quarter last year. The drop is primarily attributed to persistent delays in high-bandwidth memory (HBM) chip shipments and the impact of ongoing U.S. export controls targeting advanced semiconductor technologies bound for China.

While global demand for AI technologies is surging, Samsung has struggled to capitalize on the boom due to competition from rivals like SK Hynix and NVIDIA, who have cornered significant portions of the market for AI-optimized memory chips. Delays in qualification processes for Samsung’s latest HBM products with major clients, including U.S.-based AI firms, have hindered its market momentum.

Adding to Samsung’s woes are continued restrictions by the United States on advanced chip exports to China—one of its key markets. These export controls have led to a substantial loss in potential revenue and added uncertainty to supply chains already under pressure from global tensions.

Ironically, the earnings report comes just days after electric vehicle giant Tesla announced it had entered into a $16.5 billion agreement to source chips from Samsung. The deal, which spans multiple years, is expected to inject fresh energy into Samsung’s foundry (chip contract manufacturing) business, which has also been under pressure due to slower-than-expected client acquisition and high capital costs.

Industry analysts say that while the Tesla deal signals long-term optimism for Samsung’s position in the foundry segment, it is unlikely to offset short-term losses stemming from the semiconductor division’s current struggles.

Samsung’s consumer electronics and mobile divisions performed moderately well during the quarter, thanks to stable smartphone sales and resilient demand in some global markets. However, these gains were insufficient to counterbalance the slump in chip earnings, which remain the backbone of the conglomerate’s profitability.

Looking ahead, Samsung expressed cautious optimism, noting that it expects a gradual recovery in the semiconductor market in the second half of 2025 as HBM shipments ramp up and strategic deals like the Tesla partnership begin to bear fruit.

Still, the company acknowledged that global uncertainties—particularly in the China-U.S. tech rivalry—remain a significant overhang on its growth outlook.