Samsung's profits have taken a significant hit due to a combination of factors, including US restrictions on chip exports to China and delays in securing Nvidia's approval for its advanced memory products. The company's foundry business is struggling due to a lack of orders from major clients, making it difficult to compete with TSMC. Samsung's operating profit for the June quarter experienced a roughly 56% drop compared to the previous year.
Samsung is facing challenges in the high-bandwidth memory (HBM) chip market, crucial for AI accelerators. The company is yet to receive certification from Nvidia for its most advanced HBM3E product, creating a lead time advantage for rival SK Hynix. While Samsung has begun deliveries to AMD, this may only partially compensate for lost Nvidia revenue. Despite these challenges, Samsung is planning to ramp up production of its enhanced 12-layer HBM3E product and expects HBM sales to gradually increase.
Analysts anticipate Samsung's chip division to post an operating profit of 2.7 trillion won for the second quarter, a significant decrease from the previous year. The company's reliance on the Chinese market, where sales of advanced chips are restricted, has further impacted its growth. Samsung's mobile division, however, has shown strength, with a 23% rise in profit driven by the latest Galaxy S model with AI features.
