Samsung Q2 Operating Profit Plunges 56% Amid AI Chip Challenges

Samsung Electronics reported a sharp 56% drop in its second-quarter operating profit to 4.6 trillion won ($3.3 billion), significantly missing market expectations due to struggles in its semiconductor business, particularly in supplying advanced AI chips. The decline is partly attributed to delays in certification of Samsung's 12-layer HBM3E chip by Nvidia, allowing competitors SK Hynix and Micron to gain market share in the high-bandwidth memory segment crucial for AI applications. Samsung's revenue remained relatively stable at 74 trillion won but fell short of analyst forecasts, and the company faces increased inventory costs. In response, Samsung announced a large treasury stock buyback plan worth approximately 3.91 trillion won to support its stock price and provide executive and employee bonuses. Despite improvements in some chip segments, Samsung's inability to secure early certification has resulted in an expected loss in market share to SK Hynix, which is projected to lead the market by 2025. Overall, Samsung's semiconductor challenges highlight its competitive pressures amid the growing AI chip demand.