Samsung Faces 39% Operating Profit Decline Due to Nvidia Chip Delays

Samsung Electronics is expected to report a 39% decline in its second-quarter operating profit, primarily due to delays in supplying advanced memory chips to Nvidia, the leader in AI chips. The company is projected to post an April–June operating profit of 6.3 trillion won ($4.62 billion), marking its weakest result in six quarters. This decline is attributed to the slow approval process for a new version of Samsung’s high-bandwidth memory (HBM) chips by Nvidia, which has added to the delay.

The prolonged dip in earnings has heightened investor concerns over Samsung’s ability to keep pace with smaller rivals in the race to produce cutting-edge HBM chips for AI-driven data centers. Samsung’s top competitors, SK Hynix and Micron, have capitalized on the strong demand for memory chips necessary for AI, while Samsung’s gains in this market have been muted due to its reliance on the Chinese market, where the United States has constrained sales of high-end chips.

Analysts have identified a key hurdle as the sluggish approval process for Samsung’s HBM3E 12-high chips by Nvidia. This has led to a likely flat HBM revenue in Q2 due to continued US sales restrictions in China and the lack of significant shipments to Nvidia. Samsung, which projected in March that real progress over its HBM chip was due as soon as June, declined to comment on whether its HBM 3E 12-layer chips successfully went through Nvidia’s qualification process.

In June, Nvidia announced that Samsung had started sending the chip to AMD. However, analysts argue that sales of Samsung smartphones should stay strong, as buyers’ demand for stock increased before US tariffs on imported phones could rise. Despite this, several of Samsung’s major businesses, including chips, smartphones, and home appliances, are dealing with business uncertainty due to a host of US trade policies. This includes the threat of a 25% tax on non-US-made smartphones and a July 9 deadline for “reciprocal” tariffs against most of its trading partners.

The US is also reportedly weighing whether to revoke the licenses it has given to global chipmakers, including Samsung. This makes the situation even more complicated and threatens to decline Samsung’s sales further. In June, the US Department of Commerce reportedly considered revoking licenses previously granted to global semiconductor companies—including Samsung, TSMC, and SK Hynix—that allow access to American goods and technology for use in their Chinese manufacturing operations. Sources familiar with the matter said such a move would significantly hamper these firms’ ability to source critical equipment for production lines in China.

A White House official noted that the measure was part of contingency planning in case tensions with China escalated. While the administration hopes the trade deal remains intact and rare earth exports from China continue as expected, the official emphasized that the US wants to keep this option on the table should diplomatic relations deteriorate. Amid these developments, US chip equipment makers with strong ties to China saw their stock prices fall. In contrast, shares of Micron—one of Samsung and SK Hynix’s main rivals in the memory chip sector—rose.