2 Sources
[1]
Samsung Elec Q2 profit likely to drop 39% on weak AI chip sales
SEOUL, July 7 (Reuters) - Samsung Electronics (005930.KS), opens new tab is expected to forecast a 39% plunge in second-quarter operating profit on Tuesday, weighed down by delays in supplying advanced memory chips to artificial intelligence chip leader Nvidia (NVDA.O), opens new tab. The world's biggest maker of memory chips is projected to report an April-June operating profit of 6.3 trillion won ($4.62 billion), its lowest income in six quarters and fourth consecutive quarterly decline, according to LSEG SmartEStimate. The prolonged weakness in its financial performance has deepened investor concerns over the South Korean tech giant's ability to catch up with smaller rivals in developing high-bandwidth memory (HBM) chips used in artificial intelligence data centres. Its key rivals, SK Hynix (000660.KS), opens new tab and Micron (MU.O), opens new tab, have benefited from robust demand for memory chips needed for AI, but Samsung's gains have been subdued as it relies on the China market, where sales of advanced chips have been restricted by the U.S. Its efforts to get the latest version of its HBM chips to Nvidia certified by Nvidia are also moving slowly, analysts said. "HBM revenue likely remained flat in the second quarter, as China sales restrictions persist and Samsung has yet to begin supplying its HBM3E 12-high chips to Nvidia," said Ryu Young-ho, a senior analyst at NH Investment & Securities. He said Samsung's shipments of the new chip to Nvidia are unlikely to be significant this year. Samsung, which expected in March that meaningful progress over its HBM chip could come as early as June, declined to comment on whether its HBM 3E 12-layer chips had passed Nvidia's qualification process. The company, however, has started supplying the chip to AMD, the U.S. firm said, opens new tab in June. Samsung's smartphone sales are likely to remain solid, helped by demand for stock ahead of potential U.S. tariffs on imported smartphones, analysts said. Many of its key businesses including chips, smartphones and home appliances continue to face business uncertainty from various U.S. trade policies including President Donald Trump's proposal for a 25% tariff on non-US-made-smartphones and the July 9 deadline for "reciprocal" tariffs against many of its trading partners. The U.S. is also considering revoking authorisations granted to global chipmakers including Samsung, making it more difficult for them to receive U.S. technology at their plants in China. Shares in Samsung, the worst performing stock among major memory chipmakers this year, have climbed about 19% this year, underperforming a 27.3% rise in the benchmark KOSPI (.KS11), opens new tab. ($1 = 1,363.3600 won) Reporting by Heekyong Yang; Editing by Miyoung Kim and Sonali Paul Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Artificial Intelligence
[2]
Samsung Elec Q2 profit likely to drop 39% on weak AI chip sales
SEOUL (Reuters) -Samsung Electronics is expected to forecast a 39% plunge in second-quarter operating profit on Tuesday, weighed down by delays in supplying advanced memory chips to artificial intelligence chip leader Nvidia. The world's biggest maker of memory chips is projected to report an April-June operating profit of 6.3 trillion won ($4.62 billion), its lowest income in six quarters and fourth consecutive quarterly decline, according to LSEG SmartEStimate. The prolonged weakness in its financial performance has deepened investor concerns over the South Korean tech giant's ability to catch up with smaller rivals in developing high-bandwidth memory (HBM) chips used in artificial intelligence data centres. Its key rivals, SK Hynix and Micron, have benefited from robust demand for memory chips needed for AI, but Samsung's gains have been subdued as it relies on the China market, where sales of advanced chips have been restricted by the U.S. Its efforts to get the latest version of its HBM chips to Nvidia certified by Nvidia are also moving slowly, analysts said. "HBM revenue likely remained flat in the second quarter, as China sales restrictions persist and Samsung has yet to begin supplying its HBM3E 12-high chips to Nvidia," said Ryu Young-ho, a senior analyst at NH Investment & Securities. He said Samsung's shipments of the new chip to Nvidia are unlikely to be significant this year. Samsung, which expected in March that meaningful progress over its HBM chip could come as early as June, declined to comment on whether its HBM 3E 12-layer chips had passed Nvidia's qualification process. The company, however, has started supplying the chip to AMD, the U.S. firm said in June. Samsung's smartphone sales are likely to remain solid, helped by demand for stock ahead of potential U.S. tariffs on imported smartphones, analysts said. Many of its key businesses including chips, smartphones and home appliances continue to face business uncertainty from various U.S. trade policies including President Donald Trump's proposal for a 25% tariff on non-US-made-smartphones and the July 9 deadline for "reciprocal" tariffs against many of its trading partners. The U.S. is also considering revoking authorisations granted to global chipmakers including Samsung, making it more difficult for them to receive U.S. technology at their plants in China. Shares in Samsung, the worst performing stock among major memory chipmakers this year, have climbed about 19% this year, underperforming a 27.3% rise in the benchmark KOSPI. ($1 = 1,363.3600 won) (Reporting by Heekyong Yang; Editing by Miyoung Kim and Sonali Paul)
Share
Copy Link
Samsung Electronics is forecasted to report a significant drop in Q2 operating profit due to delays in supplying advanced memory chips to AI leader Nvidia, highlighting the company's struggles in the competitive AI chip market.
Samsung Electronics, the world's largest memory chip maker, is bracing for a significant downturn in its financial performance. The tech giant is expected to report a 39% drop in second-quarter operating profit, with projections pointing to 6.3 trillion won ($4.62 billion) - its lowest in six quarters and fourth consecutive quarterly decline 12.
Source: Reuters
The primary factor behind this financial setback is Samsung's delay in supplying advanced memory chips to Nvidia, the leader in artificial intelligence chips. This lag has raised concerns among investors about Samsung's ability to compete with smaller rivals in developing high-bandwidth memory (HBM) chips, which are crucial for AI data centers 1.
While competitors like SK Hynix and Micron have capitalized on the growing demand for AI-related memory chips, Samsung's gains have been limited. The company's reliance on the Chinese market, where U.S. restrictions on advanced chip sales are in place, has further dampened its performance 12.
Samsung's efforts to get its latest HBM chips certified by Nvidia have been moving at a sluggish pace. According to Ryu Young-ho, a senior analyst at NH Investment & Securities, "HBM revenue likely remained flat in the second quarter, as China sales restrictions persist and Samsung has yet to begin supplying its HBM3E 12-high chips to Nvidia" 1.
The company had anticipated meaningful progress with its HBM chip as early as June, but has declined to comment on whether its HBM 3E 12-layer chips have passed Nvidia's qualification process. However, Samsung has started supplying these chips to AMD, as confirmed by the U.S. firm in June 12.
Beyond the AI chip market, Samsung faces additional hurdles:
Despite these challenges, Samsung's shares have climbed about 19% this year. However, this performance lags behind the broader market, with the benchmark KOSPI rising 27.3% over the same period. Samsung currently stands as the worst-performing stock among major memory chipmakers this year 12.
As the tech industry continues to evolve rapidly, particularly in the AI sector, Samsung's ability to overcome these obstacles and regain its competitive edge will be crucial for its future growth and market position.
Summarized by
Navi
[2]
French tech giant Capgemini agrees to acquire US-listed WNS Holdings for $3.3 billion, aiming to strengthen its position in AI-powered intelligent operations and expand its presence in the US market.
10 Sources
Business and Economy
4 hrs ago
10 Sources
Business and Economy
4 hrs ago
Isomorphic Labs, a subsidiary of Alphabet, is preparing to begin human trials for drugs developed using artificial intelligence, potentially revolutionizing the pharmaceutical industry.
3 Sources
Science and Research
12 hrs ago
3 Sources
Science and Research
12 hrs ago
BRICS leaders are set to call for protections against unauthorized AI use, addressing concerns over data collection and fair payment mechanisms during their summit in Rio de Janeiro.
3 Sources
Policy and Regulation
20 hrs ago
3 Sources
Policy and Regulation
20 hrs ago
Huawei's AI research division, Noah Ark Lab, denies allegations that its Pangu Pro large language model copied elements from Alibaba's Qwen model, asserting independent development and adherence to open-source practices.
3 Sources
Technology
4 hrs ago
3 Sources
Technology
4 hrs ago
CoreWeave, an AI-focused cloud infrastructure provider, announces plans to acquire Core Scientific, a leading data center infrastructure company, in a $9 billion all-stock deal. The acquisition aims to strengthen CoreWeave's position in the AI market by bringing critical infrastructure in-house.
3 Sources
Business and Economy
4 hrs ago
3 Sources
Business and Economy
4 hrs ago