amsung Electronics on Tuesday projected a 56% year-on-year plunge in its second-quarter profit, estimating earnings at around $3.4 billion (₩4.6 trillion), due to weak demand for artificial intelligence (AI) chips.
Second-quarter profit
- Samsung was expected to post an operating profit of $4.6 billion for the quarter ending June, according to LSEG SmartEstimate.
- That would be its weakest in six quarters, according to Reuters.
- The company projected its revenue to hit $54.1 billion, coming below the LSEG SmartEstimate of $55.3 billion.
- Samsung partly attributed the decline in chip profits to inventory value adjustments, though it did not provide further details.
- However, Samsung Electronics shares rose 1.1% as of 9:00 am AST Arabia, after falling as much as 1.1% in early trade.
- Samsung reported that earnings in its foundry business declined due to sales restrictions and inventory value adjustments linked to US export controls on advanced AI chips for China, along with persistently low utilization rates.
- The company expects the operating loss in its foundry segment to shrink in the second half of the year as utilisation improves alongside a gradual rebound in demand.
Analyst expectations
Analysts suggested that unsold HBM chips intended for Nvidia may have played a role in the significant inventory writedowns, according to a Reuters report.
They estimated that the chip division's operating profit could come in around $366.05 million, a decline of over 90% from a year earlier, while its phone business profit may have improved during the period, the report added.
However, they anticipate Samsung's profit will gradually recover, driven by the launch of new smartphones and increasing sales of HBM chips to customers beyond Nvidia.
Big number
Samsung said it plans to buy back
$2.9 billion worth of its shares, part of a $7.3 billion buyback announced last November.
What to watch for
The company is set to release its detailed financial results, including a breakdown of earnings by business segment, on July 31.