Samsung Electronics expects second-quarter operating profits to plummet 56% to 4.6 trillion won as the South Korean tech giant struggles to capture demand from AI chip leader Nvidia. The disappointing forecast, which fell short of analyst expectations by nearly 27%, highlights Samsung’s difficulty competing with rivals like SK Hynix and Micron in the crucial high-bandwidth memory (HBM) chip market that powers AI applications.
What you should know: Samsung’s projected earnings represent a significant miss compared to analyst forecasts and reflect deeper structural challenges in the AI chip supply chain.
- Operating profit is expected to drop to 4.6 trillion won ($3.36 billion) for the quarter ending June, down from 10.44 trillion won year-over-year.
- Revenue is projected at 74 trillion won, missing the LSEG SmartEstimate of 75.55 trillion won.
- The company’s shares fell as much as 1.13% in early trading following the earnings guidance release.
The big picture: Samsung’s struggles underscore how critical Nvidia’s supplier certification has become for memory chip manufacturers seeking to capitalize on the AI boom.
- SK Hynix has secured a dominant position as Nvidia’s key HBM supplier, controlling roughly 70% of global HBM demand.
- Samsung has reportedly been working to get its latest HBM chips certified by Nvidia, but certification has been pushed back to at least September.
- The company has secured some HBM supply deals with AMD for AI processors, but these wins are unlikely to impact second-quarter results due to production timing.
Why this matters: Samsung’s difficulties highlight the concentrated nature of AI chip demand and the high stakes of supplier qualification processes.
- “Given that Nvidia accounts for roughly 70% of global HBM demand, the delay meaningfully caps near-term upside,” said Ray Wang, research director at Futurum Group.
- High-bandwidth memory chips are essential for AI applications, representing a high-margin business opportunity that Samsung is struggling to capture.
- The company’s foundry business continues facing weak orders and intense competition from Taiwan Semiconductor Manufacturing Company.
What’s hurting performance: Multiple factors contributed to Samsung’s profit decline beyond just missing AI opportunities.
- Inventory value adjustments impacted quarterly results.
- U.S. restrictions on advanced AI chips for China reduced demand.
- The foundry business continues experiencing operating losses.
- “The upside in the high-margin HBM business remains muted this quarter,” explained MS Hwang, research director at Counterpoint Research.
What they’re saying: Samsung acknowledged the HBM certification delays while expressing optimism about future progress.
- The company declined to comment on specific deals with Nvidia but said “improved HBM products are proceeding with customer evaluation and shipments.”
- Ray Wang noted that “it is clear that Samsung has yet to pass Nvidia’s qualification for its most advanced HBM.”
- Reuters reported in September that Samsung had instructed subsidiaries worldwide to cut 30% of staff in some divisions.
Looking ahead: Samsung’s stock remains up over 16% year-to-date despite the challenging quarter, with detailed results expected later this month.
Recent Stories
DOE fusion roadmap targets 2030s commercial deployment as AI drives $9B investment
The Department of Energy has released a new roadmap targeting commercial-scale fusion power deployment by the mid-2030s, though the plan lacks specific funding commitments and relies on scientific breakthroughs that have eluded researchers for decades. The strategy emphasizes public-private partnerships and positions AI as both a research tool and motivation for developing fusion energy to meet data centers' growing electricity demands. The big picture: The DOE's roadmap aims to "deliver the public infrastructure that supports the fusion private sector scale up in the 2030s," but acknowledges it cannot commit to specific funding levels and remains subject to Congressional appropriations. Why...
Oct 17, 2025Tying it all together: Credo’s purple cables power the $4B AI data center boom
Credo, a Silicon Valley semiconductor company specializing in data center cables and chips, has seen its stock price more than double this year to $143.61, following a 245% surge in 2024. The company's signature purple cables, which cost between $300-$500 each, have become essential infrastructure for AI data centers, positioning Credo to capitalize on the trillion-dollar AI infrastructure expansion as hyperscalers like Amazon, Microsoft, and Elon Musk's xAI rapidly build out massive computing facilities. What you should know: Credo's active electrical cables (AECs) are becoming indispensable for connecting the massive GPU clusters required for AI training and inference. The company...
Oct 17, 2025Vatican launches Latin American AI network for human development
The Vatican hosted a two-day conference bringing together 50 global experts to explore how artificial intelligence can advance peace, social justice, and human development. The event launched the Latin American AI Network for Integral Human Development and established principles for ethical AI governance that prioritize human dignity over technological advancement. What you should know: The Pontifical Academy of Social Sciences, the Vatican's research body for social issues, organized the "Digital Rerum Novarum" conference on October 16-17, combining academic research with practical AI applications. Participants included leading experts from MIT, Microsoft, Columbia University, the UN, and major European institutions. The conference...