Samsung Electronics, once the undisputed leader in memory chips and a dominant force in global semiconductors, has flagged a staggering 56% drop in second-quarter operating profit—a stark sign of how far the company has slipped in the intensifying chip war. The South Korean giant’s Q2 2025 operating profit is estimated at just 4.6 trillion won ($3.36 billion), missing analyst expectations by a wide margin and marking its lowest quarterly profit in six quarters.
Samsung’s semiconductor division, especially its Device Solutions (DS) unit, has been hammered by a combination of weak AI chip sales and tightening US export controls on advanced chips to China. These restrictions have not only cut off a key market but also forced costly inventory adjustments and left high-tech factories running below capacity.
While rivals SK Hynix and Micron have capitalized on surging AI demand—particularly from US customers like Nvidia—Samsung has faced delays in shipping high-bandwidth memory (HBM) chips to Nvidia, a critical partner for AI applications. Analysts say Samsung’s HBM products are still undergoing customer assessments, putting it behind in a market where speed and reliability are paramount.
Samsung’s challenges go beyond geopolitics. HSBC analysts and others point to fundamental weaknesses: Samsung’s HBM chips are struggling to match the performance of SK Hynix and Micron, and the company is losing foundry customers to TSMC, the world’s leading contract chipmaker. Chinese players like ChangXin Memory Technologies and Huawei are also ramping up, eating into Samsung’s share in both memory and logic chips.
The company’s foundry business (contract chip manufacturing) and NAND flash segment (for data storage) both saw profit declines, with low utilization rates and falling prices widening losses. The strong won-dollar exchange rate since June has further weighed on earnings.
Samsung’s profit warning has rattled investors and raised questions about its ability to rebound in a rapidly evolving chip landscape. While the company expects a gradual recovery in the second half of 2025—helped by improved HBM shipments and new smartphone launches—analysts caution that regaining lost ground will require faster innovation and better execution.
Samsung’s detailed Q2 financial results, due at the end of July, will offer more insight into the scale of the challenge. For now, the brutal profit plunge is a wake-up call: in the global chip war, even the biggest players can quickly lose their edge if they fail to keep pace with technology, market shifts, and geopolitical risks.
