Samsung Electronics, the flagship of South Korea’s powerful Samsung Group, has reported a sharp decline in its operating profit, attributed largely to US restrictions on AI chip exports to China.
According to a regulatory filing released on Thursday, the company’s operating profit for the second quarter (April–June) stood at ₩4.7 trillion (US$3.4 billion) — a 55% drop compared to the same period last year.
Its net profit also declined to ₩5.1 trillion, marking a 48% year-on-year decrease.
Financial Figures (April–June Quarter)
| Metric | Value | Year-on-Year Change |
| Operating Profit | ₩4.7 trillion (US$3.4bn) | ▼ 55% |
| Net Profit | ₩5.1 trillion | ▼ 48% |
| Sales Contribution (2024) | Tesla Deal = 7.6% of annual sales | New addition |
Impact of Export Curbs and Chip Sector Outlook
Samsung stated in a press release:
“Despite a notable revenue increase from Q1, the Foundry Business experienced weak earnings due to inventory value adjustments, following US-imposed export restrictions on advanced AI chips to China.”
Looking ahead to the second half of 2025, the company outlined plans to:
- Ramp up mass production in its foundry segment.
- Enhance factory utilisation and profitability by expanding sales to key clients.
The company remains optimistic about the market for AI technologies:
“Demand for AI is expected to remain strong due to continued investments by major cloud service providers, keeping server demand for both DRAM and NAND robust.”
- DRAM: Chips for fast data processing
- NAND: Chips for long-term data storage
Strategic Boost: Legal Clarity & Tesla Partnership
The poor earnings report is offset somewhat by two recent major developments:
1. Legal Victory for Chairman Lee Jae-yong
- Samsung’s executive chairman Lee Jae-yong was acquitted by South Korea’s Supreme Court earlier this month.
- He had been facing charges of stock price manipulation, breach of trust, and accounting fraud.
- The final acquittal ends years of legal uncertainty at the helm of the tech giant.
2. $16.5 Billion Tesla Deal
- Samsung has signed a $16.5 billion agreement with Tesla, set to run through 2033.
- Under the deal, Samsung will supply AI6 chips for Tesla’s vehicles.
According to MS Hwang, Research Director at Counterpoint:
“This deal marks a critical step in Samsung’s ambition to expand its footprint in the competitive AI chips sector.”
“It will broaden the company’s client portfolio, enabling a stronger reference base in the fast-moving AI hardware market.”
Competitive Landscape and Future Prospects
Samsung’s foundry business, which involves contract manufacturing of semiconductors designed by other firms, has been trailing rivals such as:
| Competitor | Country | Strengths |
| SK hynix | South Korea | Strong in memory chips |
| TSMC | Taiwan | Global leader in AI and advanced chips |
The Tesla partnership is expected to reinvigorate Samsung’s positioning in the race for next-generation AI chips, particularly in the automotive and data centre sectors.
