What just happened? Samsung's chip division has been in trouble for months, but the latest quarterly results confirm the slump is even deeper than feared. The company now faces heavy losses in semiconductors even as other divisions struggle to keep its profits afloat.
Samsung Electronics recently posted its second-quarter financial results, and they're worse than expected. According to CBNC, the Korean tech giant reported revenue of 74.6 trillion won ($53.7 billion US), slightly up from 74.07 trillion won ($53.3 billion) during the same period last year. Unfortunately, operating profits fell sharply to just ₩4.7 trillion ($3.38 billion), dragged down by a massive 93.8 percent drop in its chip business. Simply put, Samsung's results underperformed even the company's gloomy forecast from nearly a month ago.
The Device Solutions division, which handles memory chip manufacturing, semiconductor design, and foundry operations, saw its operating earnings nearly vanish year-over-year. The chip business posted quarterly operating profits of only ₩400 billion ($288 million), down sharply from ₩6.45 trillion ($4.64 billion) a year earlier. Revenue also declined to ₩27.9 trillion ($20 billion) from ₩28.56 trillion ($20.5 billion) in 2024.
Samsung's CFO Soon-cheol Park attributed the profit slump to multiple factors, including the impact of Trump-era tariffs and export restrictions on China. Despite these challenges, Park forecasts a gradual improvement in the coming months.
"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," Park said.
Samsung expects a business rebound in the second half of the year, with steady earnings growth through 2025. Negotiations between South Korea and the Trump administration helped ease market uncertainties, though Washington may still impose additional semiconductor tariffs at some point.
The company is apprehensive about its struggling foundry division, which Counterpoint Research VP Neil Shah calls a "critical juncture between survival and profitability." Samsung's VP Noh Mi-jung expects foundry revenue to improve in the second half of the year, largely thanks to mass production of next-generation 2nm chips for mobile devices.
Samsung recently delayed construction of a massive new chip plant in Texas after failing to secure a major customer. However, the company landed a lucrative contract to manufacture Tesla's next-generation AI6 chips, offering hope for a turnaround.
Analyst Nam Hyung Kim warned that manufacturing costs at the new Taylor plant will be much higher than in Korea, so it remains to be seen if the US venture will benefit Samsung overall. The South Korean foundry business also faces mounting competition from market leader TSMC, SK Hynix, and others.
Samsung's strongest second-quarter performance came from its mobile division, which posted operating profits of 3.1 trillion won, up from 2.23 trillion won in 2024. The Galaxy S25 and A series smartphones, along with Galaxy tablets, saw "robust" sales, while newly launched foldable phones should hold off growing competition from Chinese brands.
Samsung posts brutal financials as chip business profits plunge by 94%
