Samsung projects a 56% plunge in operating profit, blaming U.S. chip controls on China

Chip controls on ChinaBY AFPBY AFPSamsung's key semiconductors division "recorded a quarter-on-quarter decline in fit due to inventory value adjustments and the impact of U

Restrictions on advanced AI chips for China", it said

Jung Yeon-Je—AFP via Getty ImagesSamsung Electronics said Tuesday it expected its second quarter operating fits to fall by more than half, blaming U

Export controls on advanced AI chips to China

The firm is the flagship subsidiary of South Korean giant Samsung Group, by far the largest of the family-controlled conglomerates that dominate in Asia’s fourth-largest economy

The giant said in a regulatory filing that its April-June operating fits were expected to drop to 4. 6 trillion won ($3. 3 billion)—down 56% from a year earlier and 31% from the previous quarter

The figure was 23. 4% lower than the average estimate, according to South Korea’s Yonhap news agency, which cited its own financial data firm

The company did not disclose its net income or the detailed earnings of its divisions

In a separate release, the company explained why the results “fell short of market expectations”

The company’s key semiconductors division “recorded a quarter-on-quarter decline in fit due to inventory value adjustments and the impact of U

Restrictions on advanced AI chips for China”, it said

Washington has expanded efforts to prevent Beijing getting state-of-the-art chips over concerns that they could be used to advance the country’s military systems and other capabilities

The restrictions mean the company’s high- factories were running well below capacity

However, Samsung jected that in the second half of the year it would trim operating losses “as utilization imves due to a gradual recovery in demand”

The outlook for the next quarter is more optimistic, with “memory chip prices and shipments to keep rising, thanks to strong demand”, especially from data centers, added Hsu, including for AI

Performance from the company’s HBM chips—used for advanced AI computing—”ly fell short of expectations”, said Chae Min-sook, an analyst at Korea Investment and Securities

In addition, a price drop for its NAND—used for data storage—”ly widened losses slightly”, Chae added. “The sharp decline in the won-dollar exchange rate since June will ly weigh on both sales and operating fit (for the second quarter),” she added

Samsung is among the smartphone makers under pressure from U

Trump has repeatedly demanded that global companies—including Samsung and rival Apple—relocate duction to the United States, which many experts warn is unrealistic, citing complex Asia-based supply chains

South Korea has already been hit by levies on steel and car exports, and said Tuesday it was maintaining “close communication” with the Trump administration as it sought to head off additional measures.