Samsung Electronics is in for another rough quarter—and there’s no sugar-coating it. The tech giant is expected to report a 21% drop in first-quarter operating profit, dragged down by sluggish demand for high-end AI chips and ongoing trouble in its contract chip-making arm.
That’s a bitter pill for a company still reeling from the sudden loss of co-CEO Han Jong-Hee and facing tough competition on all fronts.
Per Reuters, the company’s estimated profit for the January–March quarter is 5.2 trillion won ($3.62 billion), a sharp decline from the 6.6 trillion won recorded a year earlier. The numbers speak for themselves—Samsung is falling behind.
At the heart of the problem is its inability to keep pace with SK Hynix, which has become the go-to supplier of high-performance memory chips for AI industry giants like Nvidia.
Samsung, meanwhile, has had to rely more heavily on mid-range and low-end products, particularly in China. But even that market is cooling. “The share of HBM chips in Samsung’s overall DRAM shipments may have declined slightly in the first quarter, leading to an expected decrease in DRAM profitability,” said Ryu Young-ho, senior analyst at NH Investment & Securities.
Simply put: Samsung isn’t shipping enough of the right kind of chips. High Bandwidth Memory (HBM) chips—the backbone of advanced AI systems—aren’t selling as expected. The demand that poured in late last year from Chinese firms trying to beat new U.S. restrictions has fizzled.
And unlike SK Hynix, which is expected to more than double its profit this quarter, Samsung’s chip division is bleeding. Analysts peg the unit’s Q1 profit at 1.7 trillion won, down from 1.9 trillion won last year.
To make matters worse, prices across the board are falling. DRAM chip prices—essential for PCs and phones—have slid by 25% year-on-year. NAND flash, used in storage devices, has plummeted by 50%. That’s a brutal environment for any chipmaker, but for one overly reliant on commodity chips, it’s a direct hit.
It doesn’t help that Samsung’s foundry business, which manufactures chips for other firms, is still stuck in limbo. The planned U.S. plant—originally slated to go live in 2024—is now reportedly delayed until 2027. No big production deals have come through, and the division remains unprofitable.
There’s a bright spot, albeit a modest one. The mobile and network segment is expected to post a 3.7 trillion won profit, slightly better than last year’s 3.5 trillion. Higher smartphone shipments and a weaker Korean won helped boost overseas earnings. But even this profit can’t distract from the bigger picture: the core of Samsung’s business is under serious pressure.
Trade tensions are adding fuel to the fire. Fresh U.S. tariffs are set to raise production costs for everything from smartphones to TVs and home appliances. Samsung’s global supply chain strategy may provide a slight buffer—most of its TVs sold in North America are made in Mexico, which escaped the brunt of the new tariffs.
But the company isn’t sitting back. “Samsung could look to diversify its production base … as part of its mid-to-long-term strategy. However, that isn’t something that can be done within a year or two,” said Jeff Kim, head of research at KB Securities. “If tariffs on consumer electronic devices, such as smartphones, persist, they will inevitably impact consumer demand.”
Samsung’s TV division, the largest in the world, also saw higher competition from fast-moving Chinese brands like TCL and Hisense. And though its Mexico strategy may protect TV margins in the U.S. for now, there’s no telling how long that advantage will last.
On Monday, the company’s stock took a 4.3% hit amid fears over U.S. tariffs. That drop reflects more than just investor jitters—it signals concern that Samsung’s troubles are far from over.
We’re watching a global giant struggle to recalibrate. The AI surge came crashing in, and Samsung wasn’t ready. Now it has to scale through a volatile market, falling prices, and political headwinds—all while trying to catch up to competitors who’ve already moved miles ahead.
