SEOUL (Reuters) -Samsung Electronics on Tuesday projected a 56% drop in second-quarter operating profit from a year earlier, far worse than analysts expected as its struggling chip business faced U.S. chip curbs on China.
The world’s largest memory chipmaker blamed the profit miss mainly on its Device Solutions (DS) division, which houses its chip business.
“The DS Division recorded a quarter-on-quarter decline in profit due to inventory value adjustments and the impact of U.S. restrictions on advanced AI chips for China,” Samsung said in a statement.
The memory business took a hit from one-off costs such as inventory value adjustments, though Samsung added that its improved high-bandwidth memory (HBM) products were undergoing customer evaluation and proceeding with shipments.
Its artificial intelligence chips business was dogged by delays in the supply of its latest products to Nvidia and continued losses in its contract chip manufacturing business, analysts said.
Samsung estimated an operating profit of 4.6 trillion won for the April-June period, versus a 6.2 trillion won LSEG SmartEstimate.
That would compare with 10.4 trillion won in the same period a year earlier and 6.7 trillion won in the preceding quarter.
Revenue would likely fall 0.1% to 74 trillion won from a year earlier, the filing showed.
Samsung is expected to release detailed results including a breakdown of earnings for each of its businesses in late July.
(Reporting by Heekyong Yang and Joyce Lee; Editing by Chris Reese and Sonali Paul)
