Samsung Electronics reported a significant drop in its operating profits for the second quarter of 2025, marking the first decline since 2023. The company announced preliminary operating profits of 4.6 trillion won ($3.3 billion), a staggering 56% decrease compared to the same period last year. This decline was attributed to U.S. export restrictions on AI chips to China and challenges in selling advanced memory products to Nvidia. Analysts had anticipated a smaller decline of around 41%, indicating that the company's performance fell short of market expectations.

The company is facing intense competition in the high-bandwidth memory (HBM) market, crucial for AI applications. Samsung has struggled to secure early certification for its HBM3E chips from Nvidia, allowing competitors like SK Hynix and Micron to gain a competitive edge. Despite plans to ramp up production of HBM4 chips, analysts predict that Samsung will continue to lag behind its rivals in this lucrative segment. The company aims to recover its market position but faces significant hurdles in the current landscape.