Samsung Electronics forecast a 56% drop in second-quarter profits, projecting an operating profit of 4.6 trillion won, far below analyst expectations.

The decline is attributed to inventory adjustments, U.S. restrictions on advanced AI chips for China, and lagging behind rivals like SK Hynix in high-bandwidth memory (HBM) chips critical for AI.

Samsung is still working to get its latest HBM chips certified by Nvidia, the dominant player in AI chip demand.

Weak orders and stiff competition also challenge Samsung’s chip foundry business, CNBC has reported.

Despite these issues, Samsung’s stock is up over 16% this year, with detailed Q2 results expected later this month.

Written by B.C. Begley