Samsung's smartphone profits falter significantly, with a 55% decrease in Q2 earnings
Samsung, the South Korean tech giant, has announced its Q2 2025 results, revealing a significant decline in the profit of its semiconductor division. The decline, which saw the division's operating profit plummet from approximately KRW 6.5 trillion ($4.6 billion) last year to KRW 400 billion ($287 million) this quarter, is attributed to delays in shipping high-bandwidth memory (HBM) chips to Nvidia and tightened U.S. export restrictions impacting chip sales to China [1][3][4].
Despite a slight increase in overall revenue to KRW 74.6 trillion (~$53.5 billion), Samsung’s operating profit halved to KRW 4.7 trillion (~$3.4 billion), primarily because of semiconductor-related costs, including inventory value adjustments and one-off export restriction costs affecting both memory and non-memory chip businesses [1][3][4].
The semiconductor division’s severe profit hit was partially offset by the strong performance of Samsung’s smartphone business, which grew profit by nearly 40%, contributing KRW 3.1 trillion (~$2.23 billion) in Q2 2025 [2]. Samsung is banking on demand from AI server customers such as Meta and Microsoft to boost semiconductor sales in the second half of the year by expanding high-density and high-performance memory products [1][4].
The decline in Samsung's operating profit for Q2 2025 was almost the same as compared to the same quarter the previous year [1]. This rough quarter for the semiconductor division, which contributed significantly to the decline in profits, comes as Samsung is developing HBM-3E and HBM-4 memory to stay competitive in the AI chip market [5].
On a positive note, Samsung's mobile division had a profit of approximately $2.23 billion in Q2 2025, marking a 40% increase compared to the same quarter the previous year [2]. The growth is due to strong sales across various product lines, including laptops, smartwatches, tablets, and smart rings.
In a move to turn things around, Samsung is looking to AI and new partnerships to help boost its semiconductor sales in the second half of 2025 [6]. Daniel Araujo, VP of Samsung’s Mobile Experience team, shared that the Galaxy S25 FE is arriving earlier than planned during the earnings call. The Galaxy S25 FE is expected to be released earlier than planned, around August or early September [7].
Samsung has also secured a $16.5 billion chip order from Tesla for its Texas plant, starting in 2026 [8]. As the tech industry continues to evolve, Samsung remains optimistic about the second half of 2025 due to increased AI and cloud demands from tech giants like Meta and Microsoft [1][6].
[1] https://www.reuters.com/business/samsung-posts-q2-profit-halving-due-semiconductor-slump-2025-07-29/ [2] https://www.cnbc.com/2025/07/29/samsung-posts-a-40-increase-in-mobile-division-profits-for-q2-2025.html [3] https://www.bloomberg.com/news/articles/2025-07-29/samsung-says-semiconductor-profit-plunges-on-delayed-sales-to-nvidia [4] https://www.nasdaq.com/articles/samsung-s-semiconductor-profit-plunges-on-delayed-sales-to-nvidia-2025-07-29 [5] https://www.digitimes.com/news/a20250728PD236.html [6] https://www.reuters.com/business/samsung-says-looking-ai-partnerships-help-turn-things-around-second-half-2025-2025-07-29/ [7] https://www.theverge.com/2025/07/29/22631855/samsung-galaxy-s25-fe-release-date-august-early-september [8] https://www.reuters.com/business/samsung-wins-16-5-billion-chip-order-tesla-texas-plant-2025-07-29/
Samsung's strong performance in the smartphone business, with a 40% increase in profit compared to Q2 2024, provides a ray of hope in the context of the tech giant's overall decline in operating profit, primarily due to the semiconductor division's struggles. Despite the success in gadgets like smartphones, laptops, smartwatches, tablets, and smart rings, the company is exploring partnerships in AI and technology to propel its semiconductor business forward, aiming for growth in the second half of 2025.
