Samsung’s profit more than halves, missing expectations as chip business plunges 94%

Samsung Electronics on Thursday reported a second-quarter operating profit of 4.7 trillion Korean won ($3.38 billion), missing expectations, weighed by a 93.8% profit slump in its chip business.

While Samsung’s second-quarter operating profit beat its own forecast of around 4.6 trillion won, it was a steep drop from the 10.44 trillion won recorded in the same period last year.

The South Korean technology giant posted a quarterly revenue of 74.6 trillion won, up slightly from 74.07 trillion won a year earlier and beating its forecast of 74 trillion won. 

Here are Samsung’s second-quarter results compared with LSEG SmartEstimate, which is weighted toward forecasts from analysts who are more consistently accurate:

• Revenue: 74.6 trillion won ($53.5 billion) vs. 74.43 trillion won 
• Operating profit: 4.7 trillion won vs. 5.33 trillion won

Shares of Samsung fell by as much as 1.65% in trading.

Notably, the company’s Device Solutions division, which encompasses its memory chip, semiconductor design and foundry business units, reported a 93.8% drop in operating profit year over year.

Samsung Electronics’ chip business posted an operating profit of 400 billion won in the second quarter, plunging from 6.45 trillion won in the same period last year. Chip revenue fell to 27.9 trillion won, from 28.56 trillion won last year. 

“Inventory value adjustments in memory and one-off costs related to the impacts of export restrictions related to China in non-memory had an adverse effect on profit,” the company said in a statement.

However, speaking in an earnings call, Samsung’s chief financial officer Soon-cheol Park voiced some optimism for the company in the near term.

“Despite ongoing global economic concerns driven by uncertain trade policies and geopolitical tensions, the IT industry appears poised for a gradual recovery fueled by increasing momentum in AI and robotics,” he said.

“In this context, we anticipate a rebound in our performance in the second half, following a bottoming out in the second quarter, with the earnings expected to improve steadily as the year progresses,” he added.

A Samsung executive also noted that the conclusion of trade negotiations between South Korea and the U.S. had helped to reduce uncertainties, but that the company was monitoring further details and Washington’s probe into the semiconductor industry that could result in new tariffs.

During the earnings call, Noh Mi-jung, vice president of Samsung’s Foundry business, said the company anticipates revenue improvement in the second half, driven by the full-scale mass production of its next-generation 2-nanometer mobile chips.

Samsung’s foundry business could also receive a long-term boost from a $16.5 billion contract to supply chips to a major company in a deal announced on Monday. 

While Samsung did not initially disclose the counterparty, Tesla CEO Elon Musk has said that it was his American electric vehicle maker, and that the so-called AI6 chips would be made at Samsung’s upcoming fab in Taylor, Texas.  The deal could be even larger than what’s been announced, Musk added. 

The main aim of the Tesla deal for Samsung could be attracting other potential customers to its foundry business, Nam Hyung Kim, research partner and equity research analyst at Arete, told CNBC.

However, “production costs at the Taylor site are expected to be significantly higher than those in Korea,” he said, adding that it is far too early to conclude the deal will improve Samsung’s position against market leader Taiwan Semiconductor Manufacturing Company.

Samsung’s foundry business is currently at a “critical juncture between survival and profitability,” Neil Shah, vice president of research at Counterpoint Research, said in a pre-earnings statement.

Samsung, meanwhile, has been dealing with increased competition in its memory business, which makes chips used to store data in everything from servers to consumer devices such as smartphones and laptops.

The company has traditionally been the market leader in memory. But that strength is being threatened as it falls behind rival SK Hynix in high bandwidth memory, or HBM — a type of memory used for artificial intelligence computing. 

A report from Counterpoint Research earlier this month found that SK Hynix had caught up with Samsung’s memory revenues in the second quarter, with both now vying for the top position in the global memory market. 

In the second half of the year, Samsung said it plans to proactively meet the growing demand for high-value-added and AI-driven products and continue to strengthen competitiveness in advanced semiconductors.

Samsung has reportedly been working to get the latest version of its HBM chips certified by AI chip darling Nvidia. However, analysts expect SK Hynix’s dominance in HBM to persist through this year.

Samsung’s mobile experience and networks businesses, tasked with developing and selling smartphones, tablets, wearables and other devices, reported an uptick in sales and profit.

The unit posted an operating profit of 3.1 trillion won for the second quarter, compared to 2.23 trillion won during the same period last year. 

Consolidated revenue for the unit reached 29.2 trillion won, up from 27.38 trillion won last year. 

Samsung said that strong performance was driven by robust sales of its Galaxy S25 series and Galaxy A series smartphones, as well as its Galaxy tablets.

“In H2 2025, the [mobile experience business] plans to continue a flagship-first approach for smartphone sales focusing on foldables and the Galaxy S25 series — while emphasizing the AI functionality of the Galaxy A series — to increase market share,” the company added.

Earlier this month, Samsung launched three new folding smartphones as the company looks to keep up with offerings from Chinese rivals.

Samsung successfully defended its leading position in the global smartphone market in the second quarter, according to a report from technology research firm Canalys, now part of Omdia. Samsung claimed a 19% market share by unit sales, predominantly thanks to sales of its Galaxy A series.

“Moving on to the second half of the year, overall, smartphone demand is expected to contract slightly year on year, due to concerns about rising tariffs in mature markets and the continued slowdown driven by persistent inflation,” said Daniel Araujo, vice president at Samsung’s Mobile Experience business. 

“However, the premium segment is projected to grow modestly, driven by shifting consumer preferences toward higher-end products, due in part to economic growth in emerging markets,” he added.