Samsung Electronics on Tuesday projected a 56% drop in second-quarter operating profit from a year earlier, far worse than analysts expected as its sales of artificial intelligence chips slowed in the United States and China.
The world's largest memory chipmaker blamed the profit miss on U.S. restrictions on advanced AI chips for China, but analysts said the earnings slump was also due to delays in supplying chips to key U.S. customer Nvidia.
Samsung said in a statement on Tuesday that its improved high-bandwidth memory (HBM) products were undergoing customer evaluation and proceeding with shipments, without elaborating further.
"The DS Division recorded a quarter-on-quarter decline in profit due to inventory value adjustments and the impact of U.S. restrictions on advanced AI chips for China," Samsung said in a statement.
Samsung estimated an operating profit of 4.6 trillion won for the April-June period, versus a 6.2 trillion won LSEG SmartEstimate.
That would be its weakest in six quarters, down from 10.4 trillion won in the same period a year earlier and 6.7 trillion won in the preceding quarter.
Revenue would likely fall 0.1% to 74 trillion won from a year earlier, the filing showed.
The earnings miss will fuel investor doubts about Samsung's fundamentals, although its earnings are expected to recover gradually in the third quarter helped by rising sales of HBM chips to non-Nvidia customers and new phone launches, said Greg Roh, head of research at Hyundai Motor Securities.
"The worse-than-expected profit will be negative for investor sentiment," he said.
Samsung said earnings in its foundry business also fell, driven by sales restrictions and related inventory value adjustments stemming from U.S. export controls on advanced AI chips for China, as well as continued low utilisation rates.
Last year, the U.S. ordered Taiwan Semiconductor Manufacturing Co to halt shipments of advanced chips to Chinese customers that are often used in AI applications, Reuters reported.
Samsung said it expects the operating loss in its foundry business to narrow in the second half of the year as utilisation improves in line with a gradual recovery in demand.
The company is expected to release detailed results including a breakdown of earnings for each of its businesses in late July.
