Samsung still lagging behind in the memory chip market

With its Q2 2025 results due on July 24, Samsung forecasts a 39% drop in operating profit. The group is once again suffering from delays in the design and delivery of its memory chips, a problem that is becoming a recurring issue.

Samsung Electronics expects a 39% drop in operating profit in Q2, amid delays in the delivery of advanced memory chips to Nvidia, the world's leading artificial intelligence chipmaker. In its next report, the South Korean giant is expected to announce operating profit of 6.3 trillion won ($4.62bn) for April-June, according to LSEG SmartEStimate estimates. This would be its lowest profit in six quarters.

A missed opportunity

This poor performance is fueling investor concerns about Samsung's ability to compete with smaller rivals such as SK Hynix and Micron in the race to develop HBM (High Bandwidth Memory) chips used in AI data centers.

While SK Hynix and Micron are taking full advantage of the surge in demand for these components, Samsung's gains remain limited, particularly due to its heavy exposure to the Chinese market, where sales of advanced chips are subject to restrictions imposed by the US.

According to several analysts, Samsung is lagging behind in the certification process for its new "12-high" HBM3E chips by Nvidia. "HBM-related revenues likely remained flat in Q2 as export restrictions to China persist and Samsung has not yet started shipping its 12-layer HBM3E chips to Nvidia," said Ryu Young-ho, senior analyst at NH Investment & Securities. He does not expect significant shipment volumes to Nvidia this year.

In March, Samsung said it expected significant progress on the HBM front by June. To date, the company has not confirmed whether its chips have been qualified by Nvidia. However, AMD said in June that it had started receiving these components.

For now, it remains to be seen whether Samsung will manage to take the lead in the race for 4th-generation HBM chips. With ever-increasing data flows, these new chips represent a major challenge for the AI industry.

Solid smartphones, but an uncertain environment

Samsung's smartphone sales are expected to remain robust, supported by increased demand ahead of possible US tariff increases on imported products. Analysts believe that distributors are building up stocks as a precautionary measure, as the US is considering imposing a 25% tax on smartphones manufactured outside the country.

However, regulatory pressure remains strong. Several of the group's key businesses, from semiconductors to home appliances, remain exposed to political uncertainty in the US, particularly through President Donald Trump's proposal to impose "reciprocal" tariffs across the board from July 9.

Washington is also considering revoking certain authorizations that allow foreign chip manufacturers, including Samsung, to access US technology in their factories in China, which would further complicate their operations.

Despite these headwinds, Samsung's share price has risen around 19% YTD. However, this gain is lower than the 27.3% recorded by the KOSPI benchmark index, making Samsung the worst performer amongst leading memory manufacturers.