Samsung Electronics Co’s chip unit saw profit plunge a far bigger-than-expected 94 percent in the June quarter, reflecting the depth of a slump that’s plaguing the world’s largest memory chipmaker.
The weak results at the pivotal business underline how far Samsung has fallen in the lucrative artificial intelligence (AI) arena, where SK Hynix Inc leads in high-end memory and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) dominates in contract chipmaking.
The chip arm today reported three-month operating profit of 400 billion won (US$288 million), the lowest in six quarters, versus analysts’ average projection for 2.73 trillion won.
Photo: Jung Yeon-je, AFP
The decline stemmed largely from a one-time inventory cost as US export controls led to unsold AI chips at its foundry business, which relies in part on Chinese demand. The profit decline was despite solid demand for high-end memory products for servers, the company said.
Shares of South Korea’s largest company fell as much as 1.8 percent this morning in Seoul.
The grim results reflect Samsung’s poor performance on high-bandwidth memory (HBM), Counterpoint research director MS Hwang said. Samsung’s share in the global HBM market slipped to 17 percent in the second quarter in terms of bit volume, down from more than 40 percent in the first quarter of last year, he said.
“This suggests that Samsung has fallen behind even Micron Technology Inc to rank No. 3,” in the second quarter, he said.
Samsung will “actively respond” to demand for higher-density memory, the company said. Operating losses at Samsung’s foundry unit are expected to narrow in the second half of the year on a gradual recovery in demand, the company said.
Samsung’s underwhelming quarterly report comes after the company early this week won a US$16.5 billion contract from Tesla Inc to produce AI chips at an upcoming plant in Taylor, Texas.
The company has been stepping up spending on research and development and front-end capacity in its efforts to catch up with SK Hynix and Micron in AI memory chips. Samsung has struggled to get its latest products certified by Nvidia Corp — providing an unusually long window for SK Hynix to carve out commanding leads in the booming AI memory market.
At the same time, it has been trying to win large customers away from contract chipmaking powerhouse TSMC to revive its ailing foundry division where operating rates have plunged. TSMC has begun production in Arizona and is ramping up capacity in the US, while Samsung has slowed completion of its Taylor plant, now scheduled to start operating next year.
A successful implementation of the multi-year deal with Tesla would improve Samsung’s prospects for winning more clients and validate its technology for 2-nanometer mass production.
Investors are also looking for clues as to whether Samsung will benefit from Nvidia’s resumption of sales of its H20 AI chips to China. Samsung’s less advanced HBM3 has been used alongside H20 chips in the past.
Samsung said net income came to 4.93 trillion won in the June quarter, missing the analysts’ estimate of 6.37 trillion won.
Fears about missing first-mover advantages in AI have weighed on Samsung. That’s despite solid double-digit profitability in its mobile segment, which reported solid sales of its Galaxy S25 phones. Samsung hopes to maintain momentum through the recently released Galaxy Z Fold and Z Flip as well as the debut of its first trifold smartphone later this year.
SETBACK: Apple’s India iPhone push has been disrupted after Foxconn recalled hundreds of Chinese engineers, amid Beijing’s attempts to curb tech transfers Apple Inc assembly partner Hon Hai Precision Industry Co (鴻海精密), also known internationally as Foxconn Technology Group (富士康科技集團), has recalled about 300 Chinese engineers from a factory in India, the latest setback for the iPhone maker’s push to rapidly expand in the country. The extraction of Chinese workers from the factory of Yuzhan Technology (India) Private Ltd, a Hon Hai component unit, in southern Tamil Nadu state, is the second such move in a few months. The company has started flying in Taiwanese engineers to replace staff leaving, people familiar with the matter said, asking not to be named, as the
The prices of gasoline and diesel at domestic fuel stations are to rise NT$0.1 and NT$0.4 per liter this week respectively, after international crude oil prices rose last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) announced yesterday. Effective today, gasoline prices at CPC and Formosa stations are to rise to NT$27.3, NT$28.8 and NT$30.8 per liter for 92, 95 and 98-octane unleaded gasoline respectively, the companies said in separate statements. The price of premium diesel is to rise to NT$26.2 per liter at CPC stations and NT$26 at Formosa pumps, they said. The announcements came after international crude oil prices
SinoPac Financial Holdings Co (永豐金控) is weighing whether to add a life insurance business to its portfolio, but would tread cautiously after completing three acquisitions in quick succession, president Stanley Chu (朱士廷) said yesterday. “We are carefully considering whether life insurance should play a role in SinoPac’s business map,” Chu told reporters ahead of an earnings conference. “Our priority is to ensure the success of the deals we have already made, even though we are tracking some possible targets.” Local media have reported that Mercuries Life Insurance Co (三商美邦人壽), which is seeking buyers amid financial strains, has invited three financial
CAUTION: Right now, artificial intelligence runs on faith, not productivity and eventually, the risk of a bubble will emerge,’ TIER economist Gordon Sun said Taiwanese manufacturers turned more optimistic last month, ending a five-month streak of declining sentiment as concerns over US tariffs, currency volatility and China’s overcapacity began to ease, the Taiwan Institute of Economic Research (TIER) said yesterday. The manufacturing business confidence index rose 1.17 points from June to 86.8, its first rebound since February. TIER economist Gordon Sun (孫明德) attributed the uptick to fading trade uncertainties, a steadier New Taiwan dollar and reduced competitive pressure from Chinese producers. Taiwan’s semiconductor industry is unlikely to face significant damage from Washington’s ongoing probe into semiconductors, given the US’ reliance on Taiwanese chips to power artificial