Samsung Electronics has reported a staggering 56% plunge in Q2 2025 operating profit to 4.6 trillion won, sharply missing analyst expectations and raising questions about its struggle to compete in the global AI chip market. This decline highlights vulnerabilities in the high-bandwidth memory (HBM) segment, crucial for data‑centre AI workloads, underscoring how US export controls, delayed shipments to Nvidia, and growing competition in China have dented Samsung’s performance.
Although US-based rivals such as SK Hynix and Micron continue to thrive amid strong AI demand, Samsung’s China‑centric strategy has become a liability under tightening trade regulations and local chip competition. The company also took a major hit when shipments of its new HBM‑3E chips to Nvidia were delayed, forcing hefty inventory write‑downs that slashed semiconductor division profits.
Samsung’s foundry business likewise took a hit from idle capacity and export restrictions, but the firm is hopeful that utilisation will improve in the second half of the year if demand stabilises. Still, looming US tariffs threaten to squeeze pricing power across both chips and smartphones. In response, Samsung has authorised a 3.9 trillion won share buyback, part of a broader 10 trillion won programme, to reassure investors.
Analysts emphasise that Samsung must rebuild its HBM leadership to regain momentum in the AI memory segment. While shipments to Nvidia remain delayed, the company says its latest HBM wafers are undergoing client evaluation and should ship soon. Diversifying customers beyond Nvidia and supporting new smartphone launches could help recovery towards the end of 2025.
As the semiconductor sector braces for geopolitical headwinds and supply‑chain shifts, Samsung’s next steps in restoring AI memory credibility and managing trade‑driven pricing pressures will be decisive. The full Q2 financial breakdown is expected on 31 July, offering clearer visibility into whether these measures are working.
