Days after arch rival LG posted a 47% fall in profits Samsung Electronics has posted another shock earnings result with their second quarter 2025, operating profit plunging 55.9% to US $3.3 billion.

The biggest problem is the Companies semiconductor business that failed to recognise the demand for AI processors and is today still trying to cut deals with partners such as Nvidia.

Samsung’s revenue was down 0.1%.

In its earnings guidance the South Korean Company predicted consolidated sales of $54.1 billion for the April-June period, down 1.0% percent on-year.

While Samsung did not release a detailed breakdown of the earnings by business, it explained that its Device Solution division, which oversees the company’s semiconductor business, saw a profit decline from the previous quarter due to inventory-related costs and the impact of US export controls on advanced AI chips to China.

Weak performance in the chip sector was further weighed down by large-scale inventory valuation losses.

Industry sources say Samsung likely cleared out older high-bandwidth memory products — such as those made before the advanced 12-high HBM3E currently undergoing Nvidia’s quality testing — or chips that became difficult to sell due to US export restrictions to China.

Also contributing to the Companies are  US export restrictions on advanced AI chips to China with the Company putting on hold a planned fac tory in Texas in the USA

Quarter on quarter, Samsung’s operating profit tumbled 31.2%, with its revenue falling 6.5%.

The company will release its full earnings data, including net profit, later this month.

Samsung said that their poor performance came after they increased chip inventories due to delaying the supply of AI memory chips to global big tech customers as well as to the U.S.’s tighter curbs on the sale of advanced AI chips to China.

“Non-memory business suffered from sales constraints due to sanctions against China on advanced AI chips and related inventory provisions, and performance declined due to continued low line operation,” said the company in a statement.

The earnings shock comes hours after U.S. President Donald Trump notified South Korea that goods from the country will incur a 25% tariff from Aug. 1.

Samsung’s key export items, such as smartphones and semiconductors, are excluded from the “reciprocal” tariffs so far, but it is unclear how long that situation will continue.

The second-quarter earnings results were unexpected, as they were far below market consensus. FnGuide, a local analysis firm, had forecast Samsung’s operating profit to hit 6.2 trillion won in the second quarter on revenue of 76.2 trillion won, based on predictions from 25 brokerage houses.