Samsung's profit more than halves, missing expectations as chip business plunges 94%

• Samsung posted a quarterly revenue of 74.6 trillion Korean won, up slightly from 74.07 trillion won a year earlier.
• Its second-quarter operating profit came in at 4.7 trillion won, plunging from the 10.44 trillion won recorded in the same period last year.
• Notably, its Device Solutions division recorded a 93.8% drop in operating profit year over year.

Samsung Electronics on Thursday reported a second-quarter operating profit of 4.7 trillion Korean won, missing expectations, weighed by a 93.8% profit slump in its chip business.

While Samsung's second-quarter operating profit beat its own forecast of around 4.6 trillion won, it was a steep drop from the 10.44 trillion won recorded in the same period last year.

The South Korean technology giant posted a quarterly revenue of 74.6 trillion won, up slightly from 74.07 trillion won a year earlier and beating its forecast of 74 trillion won.

Here are Samsung's second-quarter results compared with LSEG SmartEstimate, which is weighted toward forecasts from analysts who are more consistently accurate:

• Revenue: 74.6 trillion won ($53.5 billion) vs. 74.43 trillion won
• Operating profit:4.7 trillion won vs. 5.33 trillion won

Shares of Samsung fell by as much as 1.79% in early trading.

Notably, its Device Solutions division, which encompasses its memory chip, semiconductor design and foundry business units, recorded a 93.8% drop in operating profit year over year.

Samsung Electronics' chip business posted an operating profit of 400 billion won in the second quarter, plunging from 6.45 trillion won in the same period last year. Chip revenue fell to 27.9 trillion won, from 28.56 trillion won last year.

“Inventory value adjustments in memory and one-off costs related to the impacts of export restrictions related to China in non-memory had an adverse effect on profit,” the company said in a statement.

Foundry hopes, memory woes

Samsung's foundry business could receive a boost in the following quarters from a $16.5 billion contract to supply chips to a major company disclosed on Monday.

While Samsung did not disclose the counterparty, Tesla CEO Elon Musk has said that it was his American electric vehicle maker, and that the so-called AI6 chips would be made at Samsung's upcoming fab in Taylor, Texas. The deal could be even larger than what's been announced, Musk added.

The main aim of the Tesla deal for Samsung could be attracting other potential customers to its foundry business, Nam Hyung Kim, research partner and equity research analyst at Arete, told CNBC.

“Production costs at the Taylor site are expected to be significantly higher than those in Korea,” he said, adding that it is far too early to conclude the deal will improve Samsung's position against market leader Taiwan Semiconductor Manufacturing Company.

Meanwhile, Samsung has been dealing with increased competition in its memory business, which makes chips used to store data in everything from servers to consumer devices such as smartphones and laptops.

The company has fallen behind memory rival SK Hynix in high bandwidth memory, or HBM — a type of memory used for artificial intelligence computing.

A report from Counterpoint Research earlier this month found that SK Hynix had caught up with Samsung's memory revenues in the second quarter, with both now vying for the top position in the global memory market.

In the second half of the year, Samsung said it plans to proactively meet the growing demand for high-value-added and AI-driven products and continue to strengthen competitiveness in advanced semiconductors.

Consumer devices

Samsung's mobile experience and networks businesses, tasked with developing and selling smartphones, tablets, wearables and other devices, reported an uptickin sales and profit.

The unit posted an operating profit of 3.1 trillion won for the second quarter, compared to 2.23 trillion won during the same period last year.

Consolidated revenue for the unit reached 29.2 trillion won, up from 27.38 trillion won last year.

Samsung said that both revenue and operating profit grew year over year through robust sales of its Galaxy S25 series and Galaxy A series smartphones, as well as its Galaxy tablets.

“In H2 2025, the [mobile experience business] plans to continue a flagship-first approach for smartphone sales focusing on foldables and the Galaxy S25 series — while emphasizing the AI functionality of the Galaxy A series — to increase market share,” Samsung added.

Samsung successfully defended its leading position in the global smartphone market in the second quarter, according to a report from technology research firm Canalys, now part of Omdia. Samsung claimed a 19% market share by unit sales, predominantly thanks to sales of its Galaxy A series.

Earlier this month, Samsung launched three new folding smartphones as the company looks to keep up with offerings from Chinese rivals.