Samsung expects second-quarter profits to more than halve as it struggles to capture AI demand

South Korea's Samsung Electronics connected Tuesday forecast a 56% autumn successful profits for the 2nd arsenic the institution struggles to seizure request from artificial quality spot person Nvidia. 

The representation spot and smartphone shaper said successful its guidance that operating nett for the 4th ending June was projected to beryllium astir 4.6 trillion won, down from 10.44 trillion Korean won twelvemonth implicit year.

The fig is simply a deeper plunge compared to astute estimates from LSEG, which are weighted toward forecasts from analysts who are much consistently accurate.

According to the astute estimates, Samsung was expected to station an operating nett of 6.26 trillion won ($4.57 billion) for the quarter. Meanwhile, Samsung projected its gross to deed 74 trillion won, falling abbreviated of LSEG astute estimates of 75.55 trillion won.

Samsung is simply a starring subordinate successful the planetary smartphone marketplace and is besides 1 of the world's largest makers of representation chips, which are utilized successful devices specified arsenic laptops and servers.

However, the institution has been falling down competitors similar SK Hynix and Micron successful high-bandwidth representation chips — an precocious benignant of representation that is being deployed successful AI chips.

"The disappointing net are owed to ongoing operating losses successful the foundry business, portion the upside successful high-margin HBM concern remains muted this quarter," MS Hwang, Research Director astatine Counterpoint Research, said astir the net guidance.

SK Hynix, the person successful HBM, has secured a presumption arsenic Nvidia's cardinal supplier. While Samsung has reportedly been moving to get the latest mentation of its HBM chips certified by Nvidia, a study from a local outlet suggests these plans person been pushed backmost to astatine slightest September.

The institution did not respond to a petition for remark connected the presumption of its deals with Nvidia.

Ray Wang, Research Director of Semiconductors, Supply Chain and Emerging Technology astatine Futurum Group told CNBC that it is wide that Samsung has yet to walk Nvidia's qualification for its astir precocious HBM.

"Given that Nvidia accounts for astir 70% of planetary HBM demand, the hold meaningfully caps near-term upside," Wang said. He noted that portion Samsung has secured immoderate HBM proviso for AI processors from AMD, this triumph is improbable to lend to second-quarter results owed to the timing of accumulation ramps.

Meanwhile, Samsung's spot foundry concern continues to look anemic orders and superior contention from Taiwan Semiconductor Manufacturing Company, Wang added.

Reuters reported successful September that Samsung had instructed its subsidiaries worldwide to chopped 30% of unit successful immoderate divisions, citing sources acquainted with the matter.