Samsung Electronics has flagged a significant shortfall in its second-quarter profit, attributing the downturn in part to tightened U.S. export controls on advanced AI chips to China—a key market for semiconductor demand.
In preliminary earnings guidance released Tuesday, the South Korean tech giant said it expects operating profit for Q2 2025 to drop well below market expectations. While exact figures will be disclosed later this month, the company cited weaker-than-anticipated performance in its semiconductor division, the traditional engine of its profitability.
A major contributing factor, according to Samsung, is the impact of U.S. export restrictions on high-performance AI chips—measures aimed at limiting China’s access to cutting-edge computing technology. These controls have disrupted supply chains and created uncertainty around future demand from Chinese data centers and tech firms.
“The U.S. curbs on advanced chip exports to China have led to a more cautious procurement environment,” the company said in a statement. “This has directly affected sales volumes and margins for our high-end semiconductor products.”
Analysts note that Samsung, one of the world’s largest memory chip producers, is increasingly exposed to geopolitical tensions that are reshaping the global tech supply chain. The company is also facing heightened competition in the AI chip market from rivals such as NVIDIA, AMD, and emerging Chinese players.
Despite the setback, Samsung emphasized that long-term fundamentals remain intact, pointing to ongoing investments in AI, advanced foundry processes, and memory technologies optimized for data-intensive workloads.
Final Q2 earnings, including net profit and division-specific performance, will be announced later in July.
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