Summary: Samsung will reportedly post a 21% drop in its operating profit for the first quarter of this year, largely due to the company’s struggling chip business. Challenges in the foundry division and delays in kicking off production in its new US chip facility have made things worse for the company.
Samsung has been struggling with its chip business, which has been massively hurting its profitability in the last few quarters. Reports from the past month suggested that the company has even apologized to its shareholders regarding its financial situation. While the company assured that reverse the situation, things aren’t looking good just yet. Samsung will reportedly post a big drop in its first-quarter profit tomorrow, mainly due to struggles in its chip business.
Samsung to post 21% drop in its profit for Q1 2025 as chip business struggles
According to a report by LSEG SmartEstimate, Samsung could post a 21 percent drop in its operating profit for the first quarter of 2025. Samsung’s operating profit for the January-March quarter was reportedly 5.2 trillion KRW ($3.62 billion). That’s a significant drop from 6.6 trillion KRW ($4.5 billion) reported in the same period last year.
The report further claims that Samsung’s chip business is to blame for this massive drop. The company is experiencing sluggish sales of AI chips and has been facing losses in the contract-based chip manufacturing business.
To catch you up, Samsung has been struggling with falling chip profits since last year. The company has been lagging behind its direct rival, SK Hynix, when it comes to supplying advanced memory chips to AI chip giant NVIDIA.
Samsung’s struggle in the high-end market has left it relying on Chinese customers, who are in search of low-end memory chips. That’s not all; prices of Samsung’s other memory products have also dropped. The prices of DRAM and NAND flash chips are reportedly down by 25% and 50%, respectively. This also means the company’s profit is also taking a hit elsewhere.
The foundry division is also making things difficult for the company
Not to mention, Samsung is having several problems with its foundry division. It hasn’t been able to seal any big deals for advanced chips. The company might also delay the start of production at its new chip facility in the US. Although initially planned for next year, reports hint that the production might kick off in 2027.
