Seoul: Samsung Electronics Co. announced on Thursday that its net income for the second quarter nearly halved, primarily due to a downturn in its semiconductor division, which experienced its lowest earnings in over a year owing to reduced demand for high bandwidth memory (HBM).
According to Yonhap News Agency, the company revealed through a regulatory filing that its net income for the April-June period stood at 5.11 trillion won (US$3.7 billion), marking a 48 percent decrease from 9.84 trillion won a year earlier. The reported earnings fell short of market expectations, with analysts estimating an average net profit of 7.29 trillion won, as per a survey conducted by Yonhap Infomax, the financial data arm of Yonhap News Agency.
The company's operating profit was reported at 4.67 trillion won, representing a 55.2 percent decline compared to the previous year, while revenue saw a modest increase of 0.7 percent, reaching 74.56 trillion won. The semiconductor division particularly struggled, posting an operating profit of 400 billion won, the lowest since the fourth quarter of 2023 when it registered a 2 trillion-won operating loss. Samsung Electronics attributed this weak performance to one-off costs, such as inventory value adjustments.
Despite the decline in profits, chip sales rose 11 percent year-on-year to 27.9 trillion won, driven by demand for premium server chips and increased foundry orders. The main memory business displayed stable growth, supported by sales of HBM3E products and memory for data center servers. However, the System Large Scale Integration (LSI) segment continued to face low profitability, and the foundry business saw further profit declines due to inventory adjustments related to U.S. sanctions on AI chip exports to China.
The DX division, comprising mobile, TV, and home appliance businesses, experienced a 16 percent decrease in sales year-on-year to 43.6 trillion won, amid intensifying competition, while posting an operating profit of 3.3 trillion won. The mobile unit achieved sales of 29.2 trillion won and an operating profit of 3.1 trillion won, buoyed by steady sales of the Galaxy S25 series smartphones launched in the first quarter. Although the TV segment enhanced sales of premium products like Neo QLED and OLED TVs, overall earnings declined due to weak demand and increased competition.
Looking ahead to the second half, Samsung Electronics anticipates a recovery in the global information technology market, led by AI and robotics, despite ongoing concerns over trade uncertainties and geopolitical risks. The chip division aims to address the growing demand for high-value-added and AI-driven products, such as HBM, while enhancing its competitiveness in advanced semiconductor technologies. Additionally, efforts will be made to boost sales of high-density and high-performance solid-state drives (SSDs) in response to rising demand for chips for AI data centers.
The mobile division is expected to sustain its momentum in the second half by focusing on newly released foldable smartphones. Analysts predict a rebound in Samsung Electronics' earnings in the latter half of the year. According to a recent Yonhap Infomax survey, the company is forecast to record 81.4 trillion won in sales and 8.3 trillion won in operating profit during the July-December period.
Shares of Samsung Electronics fell 1.03 percent to 71,850 won on the main bourse as of 10 a.m., underperforming the broader KOSPI's 0.2 percent gain. The earnings report was released before the market opened.