Cracks in Samsung’s chip empire deepen as AI rivals surge ahead and US trade curbs bite, slashing their Q2 profits to their lowest since 2023.
Samsung Electronics has posted a 56% drop in operating profit for the second quarter of 2025, its steepest decline since 2023. The slump is largely attributed to US export controls on AI chips bound for China, which forced the company to write down significant inventory.
The South Korean tech giant reported a preliminary operating profit of 4.6 trillion won ($3.3 billion), missing market forecasts. Revenue remained steady at 74 trillion won, although a detailed financial breakdown will be provided later this month.
According to a Mint report, this marks Samsung’s first profit decline in two years and highlights its waning influence in the competitive AI chip market. Rivals like SK Hynix and Micron Technology have surged ahead, capitalising on booming demand for high-bandwidth memory chips used with Nvidia’s AI processors.
Furthermore, Samsung’s foundry business also suffered. A one-time inventory charge, resulting from unsold AI chips and weakened demand from China, negatively impacted earnings. The company acknowledged lower utilisation rates in its chip facilities, that reflected the depth of its current challenges.
Meanwhile, US trade restrictions continue to disrupt Samsung’s supply chain and growth in China, intensifying pressure on its semiconductor segment. But, despite the bleak quarter, Samsung remains cautiously optimistic.
It anticipates reduced losses in its contract chip manufacturing unit during the second half of the year, fueled by a slow but steady recovery in demand.
