Samsung Electronics Co’s chip business reported a roughly 40 percent drop in profit after US export controls dented sales of its high-end chips, even as it seeks to catch up in the lucrative artificial intelligence (AI) memory arena.
March-quarter operating profit at Samsung’s chip segment tumbled to 1.1 trillion won (US$770 million) on erosion in average selling price, as well as a drop in sales of its key high-bandwidth memory (HBM) chips due to export controls, the company said in a statement.
Some clients also deferred orders in anticipation of upcoming enhanced HBM3E products, it said.
Photo: AFP
Those outweighed a boost from Chinese customers stockpiling chip supplies ahead of US tariffs.
“Samsung is planning to ramp up the enhanced 12-layer HBM3E product in the second quarter to meet demand from some clients,” Hyundai Motor Securities Co analyst Greg Noh said. “But unless there is demand from Nvidia, it’s difficult to expect dramatic improvement in the chip business.”
South Korea’s largest company faces mounting challenges in its HBM business. The company has struggled for months to secure Nvidia Corp’s final nod for its most advanced HBM products, which are today the most lucrative segment for memory makers. Icheon, South Korea-based SK Hynix Inc retains the top position in providing these chips to enable AI accelerators.
That catch-up effort continues to eat away at Samsung’s earnings. It spent 9 trillion won in research and development in its fiscal first quarter, up 16 percent from a year ago.
The grim numbers come even as Samsung benefited from a rebound in demand for PC memory and smartphones, two of its key sales drivers.
Customers from Apple Inc to Lenovo Group Ltd (聯想) hastened shipments to the US over the first quarter of the year to preempt tariffs by US President Donald Trump. Samsung’s own Galaxy S25 flagship smartphone series also buoyed earnings. That helped boost the company’s net income to 8.03 trillion won for the March quarter, above estimates.
However, such one-time pretariff gains do little to assuage concern about long-term demand.
Global trade tensions “make it difficult to predict future performance,” the company said in a statement.
If uncertainties fade, Samsung expects performance to improve in the second half of the year, it said.
Within Samsung’s semiconductor division, the contract chipmaking business has struggled, weighed down by a lack of significant orders from major clients.
This has made it harder to compete with Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which held a dominant market share of almost two-thirds of the global foundry market in the third quarter of last year, according to Taipei-based market researcher TrendForce Corp (集邦科技).
Samsung’s share stood at 9.3 percent.
That foundry business now aims to begin mass production using 2-nanometer processes in the June quarter, a key step in its bid to catch up to TSMC and capture some of the high-end logic chipmaking business.
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