Samsung Electronics faces a steep 56% profit drop in Q2 2025, driven by weak AI chip sales and sluggish smartphone demand. As the tech giant prepares to launch its Galaxy Z Fold 7 and Z Flip 7, can its foldable phones revive its mobile division and offset semiconductor struggles?
Samsung’s Financial Struggles and Foldable Hopes
Sharp Profit Decline
Samsung Electronics reported a projected 56% plunge in Q2 2025 operating profit, estimated at 4.6 trillion won ($3.3 billion), missing analyst forecasts of 6.2 trillion won. The decline is largely attributed to weak performance in its semiconductor division, hampered by U.S. export controls on AI chips to China and delays in high-bandwidth memory (HBM) chip approvals for key clients like Nvidia.
Semiconductor Division Woes
The Device Solutions (DS) division, traditionally Samsung’s cash cow, struggled with stagnant HBM production and fierce competition from rivals like SK Hynix and Micron. Quality issues with Samsung’s 12-layer HBM3E chips delayed Nvidia certification, while poor 3nm yields limited foundry contracts. Analysts note Samsung’s inability to penetrate the lucrative AI chip market as a key factor in the profit slide.
Mobile Division Challenges
Samsung’s Mobile eXperience (MX) division also faced headwinds, with lackluster Galaxy S25 sales and declining foldable phone shipments. Global foldable shipments dropped 1% year-on-year in Q3 2024, with Samsung’s Galaxy Z6 series underperforming, leading to a 21% shipment decline. High prices and limited differentiation have slowed foldable adoption, with the segment still accounting for less than 2% of global smartphone shipments.
Foldable Phones as a Potential Lifeline
Samsung is banking on its upcoming Galaxy Z Fold 7, Z Flip 7, and a possible Z Flip 7 FE to revitalize its mobile division. Set to launch at the Galaxy Unpacked event on July 9, 2025, in New York, these devices promise thinner designs, larger displays, and enhanced Galaxy AI features. A tri-fold model, the Galaxy G Fold, may also debut, targeting the premium segment.
Production and Market Strategy
Samsung plans to produce 5 million units of the Z Fold 7 and Z Flip 7 combined, a 39% reduction from 2024’s 8.2 million, reflecting cautious optimism. The company aims to ship 200,000 units of its tri-fold phone, focusing on limited markets. To boost sales, Samsung may adopt aggressive promotions in key regions like the U.S., where it faces competition from Motorola, Google, and Huawei.
Macroeconomic Pressures
Global economic slowdown, U.S. tariffs, and a weakened South Korean won (at a 15-year low) have compounded Samsung’s challenges. Tariffs on consumer electronics could further dampen smartphone demand, while logistics costs and currency fluctuations erode profits. Samsung’s Q2 results reflect broader tech sector struggles amid geopolitical tensions.
Future Outlook
Samsung anticipates a recovery in H2 2025, driven by new foldable launches and mass production of advanced 10nm-class 6th-generation DRAM. Analysts remain skeptical, citing intense competition and Samsung’s lag in AI chip innovation. The success of its foldable lineup, particularly in premium markets, will be critical to offsetting semiconductor losses.
Disclaimer: This article is based on reports from Reuters, Samsung Global Newsroom, and industry analyses available as of July 8, 2025. Information is subject to change with Samsung’s official Q2 earnings report. Always verify financial data before making investment decisions.
