Seoul, July 31

Samsung Electronics said on Thursday that its net income plunged nearly 50 per cent in the second quarter (Q2), as its semiconductor division logged its lowest earnings in over a year due to sluggish demand for high bandwidth memory (HBM).

In a regulatory filing, the company reported a net income of 5.11 trillion won (US$3.7 billion) for the April-June period, down 48 percent from 9.84 trillion won a year earlier, reports Yonhap news agency.

The earnings fell short of market expectations. The average estimate of net profit by analysts stood at 7.29 trillion won, according to a survey by Yonhap Infomax, the financial data firm of Yonhap News Agency.

Operating profit stood at 4.67 trillion won, down 55.2 percent from a year ago, while revenue rose 0.7 percent to 74.56 trillion won.

The semiconductor division posted 400 billion won in operating profit, the lowest since the fourth quarter of 2023, when it recorded a 2 trillion-won operating loss.

Samsung Electronics attributed the weak bottom line in its chip division to one-off costs, such as inventory value adjustments.

Despite a weak profit, chip sales climbed 11 percent on-year to 27.9 trillion won, driven by demand for premium server chips and increased foundry orders.

Its main memory business posted stable growth, supported by sales of HBM3E products and memory for data centre servers.

However, the fabless segment, or System Large Scale Integration (LSI), continued to struggle with low profitability, and the foundry business saw its profit worsen due to inventory adjustments linked to U.S. sanctions on artificial intelligence (AI) chip exports to China.

Its DX division, which includes mobile, TV and home appliance businesses, saw its sales fall 16 percent on-year to 43.6 trillion won amid intensifying competition, while posting 3.3 trillion won in operating profit.

The mobile unit recorded 29.2 trillion won in sales and 3.1 trillion won in operating profit, driven by steady sales of the Galaxy S25 series smartphones released in the first quarter.

The TV segment improved sales of premium products, such as Neo QLED and OLED TVs, but overall earnings declined due to tepid demand and heightened competition.

For the second half, Samsung Electronics said it expects a recovery in the global information technology market, led by AI and robotics, despite lingering concerns over trade uncertainties and geopolitical risks.

The chip division plans to focus on meeting the growing demand for high-value-added and AI-driven products, such as HBM, and strengthening its competitiveness in advanced semiconductor technologies.

It will also make efforts to increase sales of high-density and high-performance solid-state drives (SSDs) to keep up with rising demand for chips for AI data centres.

The mobile division is expected to maintain momentum in the second half by focusing on its new foldable smartphones released earlier this month.

Analysts expect Samsung Electronics' earnings to rebound in the second half.

Samsung’s Q2 net income drops nearly 50 pc due to sluggish chip biz