Samsung anticipates a 56% drop in Q2 2025 revenue: geopolitical pressure and AI chips take a toll

Samsung Electronics, one of the global tech giants, has issued a warning that has unsettled markets and analysts alike: its revenues for the second quarter of 2025 are projected to decline by 56% year-over-year. The South Korean company attributes this sharp downturn to a combination of factors, including US-imposed trade restrictions and a slowdown in artificial intelligence chip sales, where Samsung has temporarily lost its competitive edge.

Despite remaining a leader in sectors such as smartphones, TVs, and appliances, its semiconductor business is facing significant setbacks. Geopolitical tensions, particularly exchange export restrictions on AI chips to China imposed by the US, have hampered the company’s ability to compete on equal footing with rivals like Micron and SK Hynix.

While Micron, based in the US, is unaffected by these restrictions domestically, Samsung, located in South Korea, faces increasing tariff barriers. The Trump administration, after returning to power earlier this year, has reactivated and expanded protectionist measures, severely impacting Asian manufacturers.

One of the most noticeable setbacks has been delays in delivering HBM3E memory chips—critical for NVIDIA’s high-performance GPUs—in a segment where Samsung sought to regain prominence against SK Hynix. Technical and logistical difficulties have allowed competitors to gain market share, just as AI growth demands record volumes of high-bandwidth memory.

Additionally, sales of its new Galaxy S25 line—S25, S25 Ultra, and S25 Edge—have fallen short of expectations. While technologically competitive, these devices have experienced a colder reception, partly due to increasing competition from Chinese brands like Xiaomi and Honor, which have better positioned themselves in terms of price and perceived value.

Samsung estimates its semiconductor division’s operating profit will be around 500 billion won (approximately €334 million), a 90% decrease from the same quarter last year. Traditionally, semiconductors have been Samsung’s main profit driver, so such a severe decline raises alarms.

Although foundry operations remain strategic, recent issues with delivering key products are diminishing its standing against TSMC and other Asian players.

Looking ahead, Samsung insists the situation is temporary, with measures underway to strengthen supply chains and renegotiate key contracts. They also claim to be accelerating the development of new manufacturing nodes and preparing for a recovery in the second half of the year, aligning with the high season for smartphones and new international projects.

However, industry analysts warn that the global environment does not favor a quick rebound. Economic slowdown in Europe and tightening trade conditions in the US create a challenging environment for companies reliant on global trade.

Samsung Q2 2025 Forecast Summary:

Samsung still maintains a strong position across multiple segments, but a perfect storm of regulatory restrictions, fierce competition, and technical setbacks has struck hard. The Korean giant now must demonstrate whether it has the agility and speed to reclaim its leadership in the artificial intelligence era.