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\n Just a few years ago, Samsung Electronics stood as a leading force in the global semiconductor race, dominating one chip sector and eyeing Taiwan\u2019s TSMC in the battle for supremacy in another.\n <\/p>\n
\n But recent stumbles \u2013 including its failure to capitalize early on the artificial intelligence boom \u2013 has left it outmaneuvered, experts say, as the company struggles with deepening market share losses.\n <\/p>\n
\n Samsung\u2019s second-quarter operating profit plummeted 55% to 4.7 trillion won ($3.4 billion), down from 10.4 trillion won ($7.5 billion) a year earlier, though its revenue increased slightly compared to the same period last year.\n <\/p>\n
\n Operating profit for its chip division, historically a cash cow that used to account for two-thirds of its total profit, shrank by nearly 94% from April to June compared to a year ago.\n <\/p>\n
\n It blamed<\/a> the worse-than-expected performance on inventory value adjustments, low utilization rate for its contract chipmaking business and continued fallout from US export controls on advanced AI chips to China \u2013 a key market for Samsung.\n <\/p>\n \n Thursday\u2019s disappointing earnings report reignites concerns about the future of the embattled South Korean tech giant.\n <\/p>\n \n Samsung warned investors of its dismal performance in its earnings projection earlier this month.\n <\/p>\n \n The results come on the heels of a $16.5 billion deal with Tesla, announced this week, to produce its new chips \u2013 a move expected to boost Samsung\u2019s outlook.\n <\/p>\n \n Looking ahead for the second half the year, Samsung said it plans to proactively meet the growing demand for high value-added and AI-driven products and continue to strengthen competitiveness in advanced semiconductors.\n <\/p>\n \n South Korea\u2019s largest conglomerate has run into significant headwinds in recent years across both of its key revenue streams: the manufacturing of memory chips, which help devices store data, and logic chips, which power data processing and computation.\n <\/p>\n \n Once the industry\u2019s leading memory chipmaker, Samsung has lost ground to rivals like South Korean SK Hynix and American Micron Technology, particularly in the fast-growing market for high bandwidth memory (HBM) sector<\/a>. HBM, made up of stacks of DRAM memory chips (dynamic random access memory) used for short-term data storage, are essential for AI processors developed by companies like Nvidia and AMD.\n <\/p>\n \n Meanwhile, Samsung\u2019s logic semiconductor business trails industry leader TSMC both in cutting-edge chip technologies and market share.\n <\/p>\n \n In the first quarter of this year, SK Hynix overtook Samsung to lead the global DRAM market<\/a>, while TSMC extended its dominance<\/a> in logic chips with a 68% market share, compared to just 8% for Samsung, according to market research firm TrendForce.\n <\/p>\n \n Sanjeev Rana, head of Korea research at CLSA, a brokerage firm, said a series of \u201cmissteps\u201d by Samsung \u2013 most notably management\u2019s failure to anticipate the surge in AI demand \u2013 has contributed to its current struggles.\n <\/p>\n \n \u201cThey were slow to recognize the coming AI revolution, and they bet on some other products, other technologies, which, in hindsight, didn\u2019t turn out to be very good bets,\u201d he said, explaining that Samsung overlooked the potential of HBM initially.\n <\/p>\n \n As a result, Samsung has so far missed out on being a supplier for its most advanced high-bandwidth memory product to Nvidia, which accounts for nearly 80% of global HBM demand last year, according to Rana. The product has repeatedly failed Nvidia\u2019s performance tests, though he expects the company to clear them in the next two months.\n <\/p>\n \n While Samsung announced in June that it managed to secure orders from AMD and Broadcom, rivals SK Hynix and Micron have already begun delivering samples of more advanced memory chips to customers.\n <\/p>\n \n At the same time, Samsung\u2019s logic chip business \u2013 once central to its ambition to rival TSMC \u2013 is also under mounting pressure. Despite tens of billions of investments over the past few years, the company has been unable to secure meaningful orders for its advanced chips, leading to underutilized facilities, Rana said.\n <\/p>\n \n Last year, CLSA estimated that Samsung\u2019s contract chipmaking business posted an operating loss of 5.6 trillion won ($4.1 billion). That figure is expected to rise to 6.6 trillion won ($4.8 billion) this year.\n <\/p>\n \n US restrictions on the sale of advanced chips to China have also taken a toll on Samsung\u2019s revenue, as shipments to Chinese clients and projects were forced to pause pending regulatory review, said Joanne Chiao, an analyst at TrendForce.\n <\/p>\n \n But with some chips now having cleared the review process, the second quarter is expected to be the most affected period, she added.\n <\/p>\n \n Tesla offered Samsung a lifeline this week. Its CEO Elon Musk announced that the electric vehicle company has tapped the Korean chipmaker<\/a> to make its new chips for self-driving cars and humanoid robots<\/a> in a $16.5 billion deal.\n <\/p>\n![\"Samsung](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2025\/07\/gettyimages-2223435979.jpg\")
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