Samsung Electronics faces a 56% profit drop in Q2 2025, driven by delays in AI chip production and intense competition from SK Hynix in the high-bandwidth memory (HBM) market. While SK Hynix dominates as Nvidia’s key supplier, Samsung struggles with certification delays and U.S. export curbs to China. The company aims to rebound with HBM4 and new chip facilities in India.
Samsung’s Battle to Regain Semiconductor Dominance
Profit Plunge Hits Samsung Hard
Samsung Electronics reported a staggering 56% drop in Q2 2025 operating profit, falling to 4.6 trillion won ($3.3 billion), missing analyst expectations of a 41% decline. The semiconductor division, a key profit driver, faced challenges due to inventory write-downs and failure to secure Nvidia certification for its 12-layer HBM3E chips, critical for AI applications.
SK Hynix’s Lead in HBM Market
SK Hynix has solidified its position as Nvidia’s primary supplier, capitalizing on the AI boom with early shipments of 12-layer HBM4 samples. The company is projected to achieve record-high earnings of nearly 9 trillion won in Q2 2025, outpacing Samsung in the high-bandwidth memory (HBM) sector. SK Hynix now holds a 57% market share in HBM, compared to Samsung’s 27%.
Nvidia Certification Woes
Samsung’s inability to secure Nvidia’s approval for its HBM3E chips has been a major setback. These chips are essential for AI accelerators and Blackwellর
Blackwell GPUs. Rival SK Hynix’s success in this area has given it a significant edge, while Samsung’s delays have led to lost market share.
U.S.-China Trade Tensions
Samsung’s heavy reliance on China for semiconductor sales has become a liability amid tightened U.S. export controls on advanced chips. These restrictions, aimed at limiting China’s access to cutting-edge technology, have impacted Samsung’s profitability more than SK Hynix, which benefits from stronger U.S. demand.
Samsung’s Recovery Plan
Samsung is banking on its upcoming HBM4 chips to regain ground. At its annual shareholder meeting, the company vowed to avoid past mistakes and strengthen its HBM market position. Additionally, Samsung is exploring resuming construction of chip manufacturing plants in South Korea and expanding its foundry operations, including a facility in Taylor, Texas, to boost 2nm chip production.
India’s Role in Samsung’s Strategy
Samsung is eyeing India as a strategic hub for semiconductor growth. The company is reportedly considering partnerships and investments in India’s burgeoning chip ecosystem, supported by the Indian government’s $10 billion semiconductor incentive scheme. This move aligns with global trends to diversify supply chains away from China.
Foundry and Production Challenges
Samsung’s foundry business faces weak orders and competition from Taiwan Semiconductor Manufacturing Company (TSMC). Posts on X indicate Samsung has shut down 30% of its 4nm, 5nm, and 7nm production lines due to low demand, with plans to reduce up to 50% by year-end. These cuts, alongside reported losses of 1 trillion won ($725 million) in Q3 2024, highlight the urgency of Samsung’s turnaround efforts.
Analyst Outlook
Analysts remain cautiously optimistic about Samsung’s recovery. Bernstein’s Mark Li projects SK Hynix’s HBM dominance to persist through 2025, but Samsung’s advancements in 1c DRAM development could help it regain competitiveness in the second half of the year. The success of its Taylor plant hinges on achieving 60-70% yield for 2nm chips within six months.
Disclaimer: This article is based on recent news reports, industry analyses, and posts on X. Information reflects the latest available data as of July 8, 2025, and may be subject to change as new developments emerge.
