US Chip Controls Reflect on Samsung's Q2 Results

Samsung warned investors that its Q2 performance fell below expectations. The Korean tech giant expects a 56% year-on-year drop in operating profit due partly to US restrictions on the supply of advanced AI chips for China.

In a stock market disclosure released ahead of its formal Q2 results announcement, the company revealed it expects to report operating profit of KRW4.6 trillion ($3.4 billion). Revenue is expected to be flat at KRW74 trillion. Samsung noted its Device Solutions (DS) division, which comprises its Memory, System LSI, and Foundry business units, suffered from inventory value adjustments and the impact of US restrictions on advanced AI chips for China.

Samsung explained earnings from the memory business suffered one-off costs, but pointed to the fact that improved high bandwidth memory products were proceeding with customer evaluation and shipments for key customers. The company is currently supplying high-performance memory product HBM3E to AMD and Broadcom, but is still awaiting Nvidia’s approval of its performance. Samsung noted that outside of memory, the unit suffered sales restrictions and related inventory value adjustments stemming from US export restrictions on advanced AI chips for China, as well as continued low utilisation rates. For H2, Samsung forecasts a gradual recovery in demand.