Samsung Electronics has projected a sharp decline in its operating profit for the second quarter, attributing the anticipated slump to the impact of US export restrictions on high-end AI chips destined for China.
In a regulatory disclosure on Tuesday, the tech giant revealed it expects operating profits between April and June to plunge by 56 per cent year-on-year to 4.6 trillion won ($3.3 billion). This figure also marks a 31 per cent decline compared to the previous quarter.
According to South Korea’s Yonhap news agency, citing data from a local financial analytics firm, the projection was nearly a quarter below market forecasts.
Revenue for the period is estimated at 74 trillion won, reflecting a marginal 0.1 per cent dip from last year and a 6.5 per cent decrease from the previous quarter.
Samsung, the flagship company of South Korea’s largest family-run conglomerate, did not release its net income figures or provide a breakdown of its divisional performance.
In a separate statement, the company acknowledged that the results underperformed market expectations, largely due to the ripple effects of Washington’s chip export curbs targeting China.
The company’s key semiconductors division “recorded a quarter-on-quarter decline in profit due to inventory value adjustments and the impact of US restrictions on advanced AI chips for China”, it said.
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Washington has intensified its measures to block China from acquiring cutting-edge semiconductor technology, citing fears that such components could strengthen Beijing’s military and technological prowess.
The clampdown has left Samsung’s advanced chip manufacturing plants operating significantly under capacity in recent months.
Despite this setback, the tech giant remains cautiously optimistic. In its outlook for the remainder of the year, Samsung said it expects to narrow operating losses as factory utilisation picks up in line with a steady rebound in demand.
On the stock market, Samsung shares dipped by about 0.8 per cent in Seoul on Tuesday, reflecting investor caution amid ongoing geopolitical and supply chain uncertainties.