Samsung expects second-quarter profits to more than halve as it struggles to capture AI demand

The figure is a deeper plunge compared to smart estimates from LSEG

Samsung also jected its revenue to hit 74 trillion won, falling short of LSEG smart estimates of 75. 55 trillion won

The company has been falling behind competitors SK Hynix and Micron in high-bandwidth memory chips

The memory chip and smartphone maker jected operating fit for the quarter ending June to be around 4. 6 trillion won, down from 10. 44 trillion Korean won year over year

The figure is a deeper plunge compared to SmartEstimate from LSEG, which is weighted toward forecasts from analysts who are more consistently accurate

Meanwhile, Samsung jected its revenue to hit 74 trillion won, falling short of the LSEG SmartEstimate of 75. 55 trillion won

Samsung is a leading player in the global smartphone market and also one of the world's largest makers of memory chips, which are used in devices such as laptops and servers

The company said in a statement that inventory value adjustments and the impact of U

Restrictions on advanced AI chips for China had contributed to the decline in fits

The company has also been falling behind competitors SK Hynix and Micron in high-bandwidth memory chips — an advanced type of memory that is being deployed in AI chips. "The disappointing earnings are due to operating losses in the foundry, while the upside in the high-margin HBM remains muted this quarter," MS Hwang, re director at Counterpoint Re, said the earnings guidance

SK Hynix, the leader in HBM, has secured a position as Nvidia's key supplier

While Samsung has reportedly been working to get the version of its HBM chips certified by Nvidia, a report from a local outlet suggests these plans have been pushed back to at least September

The company declined to on the of its deals with Nvidia, but said that imved HBM ducts are ceeding with customer evaluation and shipments

Ray Wang, re director of semiconductors, supply chain and emerging nology at Futurum Group told CNBC that it is that Samsung has yet to pass Nvidia's qualification for its most advanced HBM. "Given that Nvidia accounts for roughly 70% of global HBM demand, the delay meaningfully caps near-term upside," Wang said

He noted that while Samsung has secured some HBM supply for AI cessors from AMD, this win is unly to contribute to second-quarter results due to the timing of duction ramps

Meanwhile, Samsung's chip foundry continues to face weak orders and serious competition from Taiwan Semiconductor Manufacturing Company, Wang added

Reuters reported in September that Samsung had instructed its subsidiaries worldwide to cut 30% of staff in some divisions, citing sources familiar with the matter

Samsung Electronics' stock is up over 16% year-to-date, according to LSEG data

The company will release its detailed third-quarter results towards the end of this month.