Samsung Profit Expected to Drop 39% as HBM Chip Delays Disrupt Nvidia Supply

Samsung Electronics is expected to report a 39% drop in second-quarter operating profit on Tuesday, as delays in supplying high-bandwidth memory chips to Nvidia (NVDA, Financials) drag down the company's artificial intelligence business.

The South Korean tech giant is forecast to post operating profit of 6.3 trillion won ($4.62 billion) for the AprilJune quarter. That would mark Samsung's lowest quarterly profit in six periods and a sharp decline from 10.4 trillion won a year earlier.

The setback comes as competitors SK Hynix and Micron Technology (MU, Financials) benefit from a surge in demand for HBM chips used in AI data centers. Unlike its rivals, Samsung's gains have been limited due to U.S. restrictions on chip sales to China and delays in getting Nvidia certification for its HBM3E 12-high chips.

HBM revenue likely remained flat in the second quarter, as China sales restrictions persist and Samsung has yet to begin supplying its HBM3E 12-high chips to Nvidia, said Ryu Young-ho, senior analyst at NH Investment & Securities.

Samsung had said in March that meaningful progress could come by June, but it has declined to confirm whether the chips have passed Nvidia's qualification process. However, U.S.-based Advanced Micro Devices (AMD, Financials) said last month that Samsung has started supplying the chip to it.

While chip earnings are under pressure, Samsung's smartphone sales are expected to remain firm, with some buyers stockpiling ahead of potential U.S. tariffs. President Donald Trump has proposed a 25% duty on smartphones not made in the United States, with a July 9 deadline for reciprocal trade tariffs across multiple countries.

Adding to the uncertainty, the U.S. is also considering revoking authorizations that currently allow Samsung and other chipmakers to receive U.S. technology for their factories in China.

Samsung shares have risen about 19% this year but remain the weakest performer among major memory chipmakers, trailing the broader KOSPI index's 27.3% gain. As of 0447 GMT on Monday, Samsung shares were down 1.9% compared with a 0.3% rise in the KOSPI.

Samsung will announce official second-quarter results on Tuesday.