By Kwanwoo Jun

Samsung Electronics expects its second-quarter operating profit to more than halve from a year earlier, a much sharper drop than market consensus, hurt by U.S. trade curbs on China and its delayed sales of advanced artificial-intelligence chips to Nvidia.

The South Korean technology giant attributed its downbeat earnings guidance partly to one-off provisional costs to recognize inventory value losses stemming from U.S. export controls limiting the sale of advanced chips to China.

The company on Tuesday projected a 56% year-over-year plunge in April-June operating profit to 4.600 trillion won, equivalent to $3.34 billion, missing the 6.359 trillion won consensus estimate of analysts in a FactSet poll. That is its first profit decline since the fourth quarter of 2023, according to Samsung.

Quarterly revenue was likely flat at 74.000 trillion won, it said in a preliminary earnings report. The company, which is scheduled to release full quarterly results later this month, didn't provide further earnings details.

Samsung has been struggling to catch up with its smaller chip-making rivals, SK Hynix and Micron Technology, which have benefited from brisk shipments of higher-end AI chips.

Its shares were 1.1% lower at 61,000 won in early trading, reversing an opening gain after the preliminary earnings report. The stock has risen around 16% year to date, trailing gains by most other major memory-chip makers and underperforming the benchmark Kospi's 28% increase.

Analysts have said that Samsung's delayed supply of advanced high-bandwidth-memory products to Nvidia likely continued to weigh on the company's DRAM segment.

Samsung said Tuesday that customer evaluations and shipments of its advanced memory chips are proceeding, while operating losses in its nonmemory business, which includes its contract chip-making and logic chip-designing segments, are expected to narrow in the second half of the year due to a gradual recovery in demand.

In April, the company said sales of its HBM products could recover from the second quarter. Samsung has yet to confirm shipments of new 12-layer HBM3E products to Nvidia, although it began supplying the chips to Advanced Micro Devices in June.

Global chip makers, including Samsung, have been under pressure from U.S. restrictions on the export of advanced chips and chip-making equipment to China.

Uncertainty over protectionist U.S. trade policies has added to concerns about Samsung's smartphone business, which was strong enough in the first quarter to offset weakness in its semiconductor segment.

President Trump has threatened to impose a new levy on smartphones shipped to the U.S., in addition to higher duties on autos, steel and aluminum imports. On Monday, he said South Korea and other trading partners will face separate "reciprocal tariffs" if they fail to reach trade deals before the new Aug. 1 deadline.

Write to Kwanwoo Jun at kwanwoo.jun@wsj.com

(END) Dow Jones Newswires

July 07, 2025 21:41 ET (01:41 GMT)

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