Samsung flags steep drop in operating profit on US chip woes
SEOUL
Samsung Electronics said Tuesday it expected its second quarter operating profits to fall by more than half, blaming U.S. export controls on advanced AI chips to China.
The firm is the flagship subsidiary of South Korean giant Samsung Group.
The tech giant said in a regulatory filing that its April-June operating profits were expected to drop to 4.6 trillion won ($3.3 billion), down 56 percent from a year earlier and 31 percent from the previous quarter.
The figure was 23.4 percent lower than the average estimate.
Sales were estimated at 74 trillion won, down 0.1 percent from a year earlier and 6.5 percent from the previous quarter.
The company did not disclose its net income or the detailed earnings of its business divisions.
In a separate release, the company explained why the results "fell short of market expectations."
The company's key semiconductors division "recorded a quarter-on-quarter decline in profit due to inventory value adjustments and the impact of U.S. restrictions on advanced AI chips for China", it said.
The restrictions mean the company's high-tech factories were running well below capacity.
However, Samsung projected that in the second half of the year it would trim operating losses "as utilisation improves due to a gradual recovery in demand."
Samsung is among the smartphone makers under pressure from U.S. President Donald Trump
Trump has repeatedly demanded that global companies — including Samsung and rival Apple — relocate production to the United States, which many experts warn is unrealistic, citing complex Asia-based supply chains.
