SEOUL – Samsung Electronics reported on July 31 a 55 per cent drop in second-quarter operating profit as delays in high-bandwidth memory chip shipments and US export curbs on advanced chip sales to China continued to drag on its key semiconductor division.

The world’s largest memory chip maker posted 4.7 trillion won (S$4.4 billion) in operating profit for the April-June period, its weakest in six quarters.

The result was roughly in line with its earlier estimate of 4.6 trillion won, which had disappointed investors.

Samsung’s chip division posted a profit of 400 billion won during the quarter, down from 6.5 trillion won a year earlier, marking the first time in six quarters that the figure has dropped below the 1 trillion won mark.

Samsung said in a statement that inventory value adjustments to memory chips and one-off costs from the impact of US export restrictions on sales to China on its contract chipmaking business lowered the division’s profit.

Prolonged weakness in its financial performance has deepened investor concerns over the South Korean tech giant’s ability to catch up with smaller rivals in developing high-bandwidth memory chips sold to customers including Nvidia and used in artificial intelligence data centres.

Samsung reported earnings just days after Tesla said it had signed a US$16.5 billion (S$21.4 billion) deal to source chips from the tech giant, a move that could bolster the South Korean company’s struggling foundry business that makes chips on contract.

 Its stock is up 10 per cent since news about the agreement broke on July 28, bringing Samsung’s gains in July to over 20 per cent and putting the stock on track for its best month in more than four years. REUTERS

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