On Tuesday, Samsung Electronics said that its second quarter would drop the operating profits by more than half and blame the US export controls for advanced AI chips to China.
The company is the flagship subsidiary of the South Korean Riese Samsung Group, by far the largest of family-controlled conglomerates that dominate the business in the fourth largest economy in Asia.
The tech giant said in a regulatory submission that the operating result in April to June is expected to be 4.6 trillion (3.3 billion US dollars) 56% compared to the previous year and 31% compared to the previous quarter.
According to the Yonhap news agency in South Korea, the number was 23.4% lower than the average estimate that quoted its own financial data company.
Sales were estimated at 74 trillion, a decline of 0.1% compared to the previous year and 6.5% compared to the previous quarter.
The company has not disclosed its net result or the detailed income of its business departments.
In a separate publication, the company explained why the results “did not remain the market expectations in a row”.
The most important semiconductor department of the company “recorded a decline in profit from the quarter due to inventory value adjustments and the effects of the US restrictions on advanced AI chips for China,” it said.
Washington has expanded the efforts to prevent Beijing State -of -the -art chips from preventing the concerns that they could be used to advance the country’s military systems and other technical skills.
The restrictions mean that the company’s high-tech factories were far below the capacity.
However, Samsung predicted that in the second half of the year it would complete the operating losses “with the use due to a gradual recovery of demand”.
The shares in Samsung decreased by around 0.8% in Seoul on Tuesday.
“Weak foundry”
The sharp drop in profits and sales is “mainly attributed to the weak foundry business, while the performance of the memory business remained relatively stable,” Tom HSU, analyst at Trendforce, told AFP.
The prospects for the next quarter are more optimistic, whereby “memory chip prices and programs continue to rise thanks to the strong demand”, especially from data centers, which adds HSU, also for AI.
The performance of the company’s HBM chip for the advanced AI computing-“probably not decreased,” said Chae Min-Sook, analyst at Korea Investment and Securities.
In addition, a drop in prices for his NAND – for data storage – “probably slightly expanded losses,” added Chae.
“The severe decline in the WON-DOLLAR exchange rate since June will probably burden both sales and the profit (in the second quarter),” she added.
Samsung is one of the smartphone manufacturers, under pressure from US President Donald Trump, who threatened South Korea on Monday in a letter to Seoul with 25% tariffs.
Trump has repeatedly demanded that global corporate intersection and competition to put Apple-Die production into the United States, which warn many experts that it is unrealistic and that complex supply chains starts in Asia.
South Korea has already been made by taxes for steel and auto exports and said on Tuesday that the Trump administration had retained a “close communication” to take additional measures.
