Samsung Reports Sharp Decline in Operating Profit Amid Chip Woes and US Trade Restrictions

Operating Profit Falls by Over Half

Samsung Electronics has reported a significant drop in operating profit for the second quarter, attributing the decline primarily to challenges in its semiconductor division. According to preliminary figures released on Tuesday in Seoul, the South Korean tech giant posted an operating profit of 4.59 trillion won (approximately €2.86 billion), marking a 56% decrease compared to the same period last year.

The scale of the decline has surprised analysts, with profits falling considerably more than expected. This disappointing result pushed Samsung’s share price slightly lower during trading.

Impact of US Export Controls and Trade Policy

Samsung cited restrictions imposed by the US government on exports of AI chips to China as a key factor behind the slump. These measures, aimed at curbing the transfer of advanced technology, also affect products from international companies if they incorporate US components or technology. Given China’s importance as a sales market, such limitations present a considerable obstacle for Samsung’s semiconductor business.

Adding to the pressure are the tariffs threatened by former US President Donald Trump, which could further cloud the company’s growth prospects. While these measures are not yet in effect, the possibility alone has created uncertainty for major exporters like Samsung.

Below Market Expectations

According to a survey conducted by South Korea’s official news agency Yonhap, Samsung’s reported figures are roughly 23% below the average expectations of the economists surveyed. This underscores the severity of the earnings shortfall and the broader impact of geopolitical tensions on the tech sector.

The chip business, once Samsung’s primary profit driver, continues to face headwinds due to weakening demand and tightening global regulations. Combined with the volatile trade environment, the company is navigating one of its most challenging periods in recent years.

Preliminary Figures Subject to Revision

It is worth noting that the reported earnings are preliminary. Samsung is expected to release its finalised results later this month, which will provide more detailed insights into the performance of its key business segments.

Despite the setback, Samsung remains a dominant force in the global electronics market, competing directly with the likes of Apple in the smartphone sector and leading in memory chip manufacturing. However, the latest figures highlight the growing risks that international trade disputes and regulatory changes pose for tech giants operating on a global scale.