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Samsung Electronics on Tuesday estimated its second-quarter operating profit would see a 56 percent drop from a year earlier, amidst a delay to providing cutting-edge memory products to Nvidia for AI chips.
US restrictions on advanced AI chip sales to China also weighed on the Device Solutions (DS) unit that includes Samsung’s chip business, the company said.
“The DS 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,” Samsung stated.
Export controls
Samsung reported a preliminary operating profit of 4.6 trillion won ($3.4bn, £2.5bn) for the quarter ended in June, its first quarterly profit decline in more than a year.
The decline was far greater than analysts’ average predictions of a 41 percent drop.
Revenue was estimated at 74tn won, Samsung said ahead of an expected full financial statement later this month.
US export controls have affected South Korea’s HBM exports in recent months, with chip exports from South Korea to mainland China falling 31.8 percent year-on-year in the first two months of the year, according to South Korean government figures.
Samsung has also faced delays in certifying its latest high-bandwidth memory (HBM) chips, called HBM3E, with AI chip leader Nvidia, giving rival SK Hynix an opportunity to extend its lead in the lucrative AI accelerator field.
US chip maker Micron has also been advancing its share HBM memory.
In April Samsung said it had shipped HBM3E samples to customers and said it expected to begin mass production of HBM4 chips in the second half of this year.
Bernstein analysts had expected Samsung to certify its HBM3E with Nvidia in the second quarter, and later revised their predictions for certification to the third quarter.
Nvidia sales
Meanwhile SK Hynix began shipping the world’s first 12-layer HBM4 samples to customers earlier this year, with Micron following in June, as Samsung was forced to revise its 12-layer HBM3E design.
The firm estimates SK Hynix holds 57 percent of the HBM market this year, followed by Samsung with 27 percent and Micron with 16 percent.
Samsung in June said it had secured an HBM order from AMD, a significant AI chip maker that also uses Micron as a supplier.
But certification with Nvidia is important for gaining market share as Nvidia controls the vast majority of the AI accelerator chip market, estimated by Bank of America in January at 80 to 85 percent.
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