Samsung’s worst nightmare has already cost it a billion dollars this year

Samsung's chip business has been a continuous drag on the company's revenues and profitability for several quarters now. It's shaping up to be a similar story in the first quarter of this year as Samsung is now expected to forecast a 21% drop in Q1 2025 profits.

Based on analyst estimates, Samsung will likely forecast a 5.2 trillion won or $3.6 billion operating profit for the January – March 2025 quarter, down 21% over the same period last year, when it reported a $4.5 billion operating profit.

Based on these estimates, the company will be making almost a billion dollars less than it did during Q1 2024, and it's primarily because of the chip nightmare that it can't seem to wake up from. It's lagging behind cross-town rival SK Hynix in supplying lucrative high-bandwidth chips to NVIDIA, as its HBM3e modules haven't been approved by NVIDIA yet.

Prices of other memory products have declined. DRAM and NAND flash chip prices are down 25% and 50% respectively, so Samsung's been unable to plug the losses elsewhere. It's been trying to pad the bottom line through sales of legacy memory products to companies in China, but it can only sell less advanced chips that aren't subject to US sanctions.

The foundry division has not been able to win big orders for advanced nodes, thus limiting another lucrative revenue source for the company. This is likely going to force Samsung to delay production at its new US chip factory from 2026 to 2027, even though production was originally slated to begin in 2024.

Meanwhile, the mobile and network business is expected to account for $2.5 billion of the operating profit in Q1 2025, up marginally from $2.4 billion during the same period last year, helped by higher smartphone shipments.