“Samsung Electronics faces a 56% profit plunge in Q2 2025, driven by sluggish AI chip sales and delays in securing Nvidia certification. Rivals SK Hynix and Micron capitalize on U.S. AI demand, while U.S. export curbs on China hit Samsung’s semiconductor business hard. Despite Galaxy AI upgrades, Samsung struggles to regain its AI market edge.”
Samsung’s AI Drive: Losing Ground to Competitors?
Profit Plunge Signals AI Struggles
Samsung Electronics reported a staggering 56% drop in Q2 2025 operating profit, projecting 4.6 trillion won ($3.3 billion), down from 10.44 trillion won in Q2 2024. Analysts expected 6.26 trillion won, highlighting the severity of the shortfall. The decline stems primarily from weak AI chip sales, exacerbated by U.S. restrictions on advanced chip exports to China, where Samsung heavily relies.
HBM Chip Delays Hurt Market Share
Samsung’s high-bandwidth memory (HBM) chips, critical for AI data centers, face delays in securing certification from Nvidia for its advanced 12-layer HBM3E product. Rivals SK Hynix and Micron have gained a lead, capitalizing on robust U.S. demand for AI memory chips. Samsung’s failure to secure an early HBM market advantage has deepened investor concerns about its AI competitiveness.
U.S. Export Curbs Cripple China Sales
U.S. restrictions on AI chip sales to China have significantly impacted Samsung’s semiconductor division, which relies more on the Chinese market than its rivals. SK Hynix and Micron, benefiting from U.S. AI growth, have outpaced Samsung, whose Device Solutions division reported profit declines due to inventory adjustments and restricted China sales.
Galaxy AI Push Faces Smartphone Competition
Samsung is bolstering its Galaxy AI features, with recent posts on X hinting at a potential partnership with Perplexity to enhance Bixby and Samsung Internet. However, intense smartphone market competition and declining memory chip profits overshadow these efforts. Samsung’s multimodal AI agents in the Galaxy S25 series aim to redefine user interaction, but rivals like Apple and Google remain formidable.
Recovery Hopes Pinned on HBM4 and Foundry
Samsung’s chip business head, Jun Young-hyun, vowed at the March 2025 shareholder meeting to strengthen its HBM market position, particularly with HBM4. The company anticipates a gradual recovery in its contract chipmaking business in the second half of 2025, driven by improving demand. However, analysts remain cautious, citing persistent competitive pressures and trade tensions.
Public Perception and Investor Woes
Samsung’s financial struggles have sparked discussions about its long-term sustainability. While consumers view Samsung as reliable, ongoing profit declines may push loyal customers toward rivals perceived as more stable. Investor confidence is waning, with Samsung’s shares dropping 1.13% in early trading after the Q2 profit forecast, reflecting concerns over its AI market lag.
Disclaimer: This article is based on recent news reports, financial data, and posts on X. Information is sourced from reputable outlets like Reuters, The Hindu, and Bloomberg, but market conditions and corporate strategies may evolve. Readers should verify details independently for investment or business decisions.
