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Samsung Electronics Faces 39% Drop in Q2 Profit Amid Weak AI Chip Sales

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Samsung Electronics is expected to report a 39% decline in its second-quarter operating profit, largely due to delays in supplying advanced memory chips to AI chip leader Nvidia, industry analysts said. The South Korean tech giant is forecast to announce an operating profit of 6.3 trillion won ($4.62 billion) for April to June, marking its lowest earnings in six quarters, according to LSEG SmartEStimate.

This downturn has raised concerns about Samsung’s ability to compete with rivals like SK Hynix and Micron in the rapidly growing market for high-bandwidth memory (HBM) chips used in artificial intelligence data centers. While its competitors have seen strong demand, Samsung’s growth has been limited by its heavy reliance on the China market, where U.S. export restrictions have curbed sales of advanced chips.

Analysts point out that Samsung’s latest HBM chips, specifically the HBM3E 12-high version, have not yet received Nvidia’s certification, slowing supply to the U.S. AI chip leader. Ryu Young-ho, senior analyst at NH Investment & Securities, noted that Samsung’s shipments to Nvidia are unlikely to be significant in 2025. Samsung has, however, started supplying the new chip to AMD since June.

Despite challenges in the chip segment, Samsung’s smartphone sales remain steady, supported by stockpiling ahead of potential U.S. tariffs on imported devices. Nonetheless, ongoing U.S. trade policies, including proposed tariffs on non-U.S.-made smartphones and possible restrictions on technology exports to Samsung’s Chinese plants, continue to create business uncertainty.

Samsung’s shares have underperformed this year compared to the KOSPI index, rising about 19% against the KOSPI’s 27.3% increase. As of Monday, Samsung shares dipped 1.9%, while the KOSPI rose 0.3%.

Applied Materials Misses Q2 Revenue Target as Export Controls Weigh on Sales

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Applied Materials missed Wall Street expectations for second-quarter revenue, reporting $7.10 billion versus the estimated $7.13 billion, as U.S. export restrictions on semiconductor equipment to China and slower investment in certain markets impacted performance.

Shares of the Santa Clara-based chipmaking equipment giant fell more than 5% in extended trading following the earnings release.

Segment Performance and Key Challenges:

  • Revenue from Semiconductor Systems, the company’s largest business segment, came in at $5.26 billion, below analysts’ forecast of $5.32 billion.

  • Sales in the ICAPS market — covering IoT, communication, automotive, power, and sensors — slowed, although this was partially offset by strong demand for advanced-node chipmaking equipment.

Impact of Export Controls:

  • The U.S. government’s export restrictions, announced in December, now prevent shipment of advanced chipmaking tools to China — Applied Materials’ largest overseas market.

  • As a result, revenue from China fell to 25% of total sales, down sharply from 43% a year earlier.

  • Analyst Kinngai Chan of Summit Insights Group said the export controls are clearly impacting results, but added:

    “We think the company can overcome this headwind over time as spending on advanced process nodes picks up in the second half of 2025 and into 2026.”

Profit and Outlook:

  • Despite the revenue miss, adjusted Q2 earnings per share were $2.39, beating the $2.31 consensus.

  • Applied Materials provided Q3 revenue guidance of $7.20 billion ± $500 million, roughly in line with analyst estimates of $7.19 billion.

  • CFO Brice Hill downplayed concerns, stating:

    “Despite the dynamic economic and trade environment, we have not seen significant changes to customer demand.”

Summary:

While strong demand for advanced chips offers a long-term buffer, current headwinds from trade restrictions and market softness in core segments are affecting short-term performance. Investors remain cautious amid geopolitical friction and shifting global chip manufacturing strategies.

AMD Warns of $1.5 Billion Revenue Hit from U.S. China Chip Export Curbs, But AI Demand Remains Strong

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Advanced Micro Devices (AMD) warned on Tuesday that new U.S. restrictions on AI chip exports to China will cost the company $1.5 billion in revenue for 2025, as Washington intensifies efforts to limit China’s access to advanced technology. Despite the projected hit, AMD’s second-quarter revenue forecast surpassed Wall Street expectations, buoyed by early chip purchases from customers bracing for trade disruptions.

The Biden and Trump administrations have both ramped up controls on exports of high-performance chips to China, citing national security risks related to AI capabilities. These measures now require chipmakers like AMD and Nvidia to obtain export licenses, effectively slowing or blocking shipments of advanced processors.

CEO Lisa Su said most of the export-related impact will be felt in Q2 and Q3, but expressed confidence in broader business strength. “It’s certainly a headwind, but one which we think is well contained,” Su said, noting that AI chip revenue in AMD’s data center segment is expected to grow by “strong double digits” this year.

China represents about 25% of AMD’s total revenue, and the export curbs are expected to shave nearly 5% off 2025 revenue projections, which currently sit at $31.03 billion, per LSEG data.

In Q1, AMD reported:

  • Total revenue of $7.44 billion, up 36% year-over-year, beating the estimate of $7.25 billion

  • Adjusted earnings of 96 cents per share, 2 cents above consensus

  • Data center revenue surged 57% to $3.7 billion, above the $3.62 billion estimate

For Q2, AMD expects revenue of $7.4 billion ± $300 million, also ahead of forecasts. However, the company is still absorbing an $800 million charge due to April’s newly enacted tariffs.

CFO Jean Hu confirmed the $1.5 billion forecasted revenue loss is tied directly to the latest April export controls. Analysts suggest the current surge in orders reflects “pre-buying behavior” from large cloud clients like Microsoft and Meta, who are stockpiling chips ahead of licensing uncertainty.

“Once those safety-stock closets are full, Q3 could feel like the morning after a Red Bull binge,”
warned Michael Schulman, CIO at Running Point Capital.

Meanwhile, rivals Marvell Technology and Super Micro both disappointed investors, citing economic uncertainty and reduced AI-related optimism. Their shares fell 4.5% and 5%, respectively, in after-hours trading.

AMD’s solid results highlight its growing role in powering AI infrastructure for hyperscalers, even as trade tensions and tariffs loom over the semiconductor industry.