Samsung Electronics reported a sharp decline in its second-quarter operating profit, which dropped to 4.7 trillion Korean won ($3.38 billion), well below expectations. The company’s chip division suffered a staggering 93.8% slump in operating profit year-over-year, severely impacting overall results.
While the operating profit slightly exceeded Samsung’s own forecast of around 4.6 trillion won, it was a steep fall from 10.44 trillion won in the same quarter last year. Quarterly revenue edged up to 74.6 trillion won from 74.07 trillion won a year earlier, beating the company’s forecast of 74 trillion won.
Samsung’s Device Solutions division, encompassing memory chips, semiconductor design, and foundry units, reported an operating profit plunge of 93.8%. The chip business itself posted only 400 billion won in operating profit, down sharply from 6.45 trillion won a year prior, with revenue declining to 27.9 trillion won from 28.56 trillion won.
“Inventory value adjustments in memory and one-off costs related to the impacts of export restrictions related to China in non-memory had an adverse effect on profit,” Samsung said in a statement.
Despite the challenges, CFO Soon-cheol Park expressed cautious optimism during the earnings call:
“Despite ongoing global economic concerns driven by uncertain trade policies and geopolitical tensions, the IT industry appears poised for a gradual recovery fueled by increasing momentum in AI and robotics,” he said. “In this context, we anticipate a rebound in our performance in the second half, following a bottoming out in the second quarter, with the earnings expected to improve steadily as the year progresses.”
A Samsung executive added that the recent conclusion of trade negotiations between South Korea and the U.S. helped reduce uncertainties, although the company remains alert to further developments and Washington’s semiconductor industry probe that could introduce new tariffs.
Vice President of Samsung’s Foundry business, Noh Mi-jung, highlighted expectations for revenue improvement in the second half, driven by full-scale mass production of next-generation 2-nanometer mobile chips.
Samsung’s foundry segment may also benefit from a $16.5 billion contract announced Monday to supply chips to a major company, later revealed by Tesla CEO Elon Musk to be for Tesla’s AI6 chips manufactured at Samsung’s upcoming Texas fab. Musk hinted the deal could be even larger.
Research analyst Nam Hyung Kim noted that the deal’s main value for Samsung could be attracting other foundry customers but cautioned, “production costs at the Taylor site are expected to be significantly higher than those in Korea,” and it’s too early to say the deal will improve Samsung’s position against Taiwan Semiconductor Manufacturing Company.
Neil Shah of Counterpoint Research described Samsung’s foundry business as being at a “critical juncture between survival and profitability.”
Samsung faces growing competition in memory chips, traditionally a market leader, especially in high bandwidth memory (HBM) used for AI computing, where SK Hynix is catching up.
A recent Counterpoint report found SK Hynix matched Samsung’s memory revenues in Q2, intensifying the rivalry. Samsung plans to boost its competitiveness in advanced semiconductors and AI-driven products in the second half of 2025.
Efforts include certification of Samsung’s latest HBM chips by Nvidia, though analysts expect SK Hynix to maintain its HBM lead this year.Samsung’s mobile experience and networks division saw profit rise to 3.1 trillion won from 2.23 trillion won a year ago, with revenue increasing to 29.2 trillion won from 27.38 trillion won.
The strong performance was fueled by robust sales of the Galaxy S25 series, Galaxy A series smartphones, and tablets.
“In H2 2025, the [mobile experience business] plans to continue a flagship-first approach for smartphone sales focusing on foldables and the Galaxy S25 series — while emphasizing the AI functionality of the Galaxy A series — to increase market share,” the company said.
Recently, Samsung launched three new folding smartphones to compete with Chinese rivals.
According to Canalys, Samsung maintained its global smartphone market lead in Q2 with a 19% share, largely due to Galaxy A series sales.
Daniel Araujo, vice president of Samsung’s Mobile Experience business, forecast slight year-over-year smartphone demand contraction due to rising tariffs and inflation in mature markets but sees modest premium segment growth driven by shifting consumer preferences and emerging market growth.
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