Samsung memory earnings plunge on HBM export ban to China

Samsung logo is displayed at the Samsung Electronics office in Seocho District, Seoul, in this April 8 photo. Yonhap

Samsung Electronics’ memory chip profit backpedaled in the first quarter following the U.S. ban on exporting high-bandwidth memory (HBM) for artificial intelligence (AI) accelerators to China.

This offset notable improvements in the company’s consumer electronics earnings and held down overall operating profit growth to just 1.2 percent year-on-year.

With a tougher business environment expected for the second quarter due to Washington’s tariff measures, the company cast a worrisome view on memory chip demand in the second half.

Samsung Electronics announced Wednesday that it posted an operating profit of 6.7 trillion won ($4.67 billion) in the first quarter, up 1.2 percent from a year earlier. Revenue stood at 79.14 trillion won, marking a 10.05 percent increase over the same period.

This marks the highest quarterly revenue in Samsung Electronics’ history, driven by strong sales of the Galaxy S25 series and increased sales of high-value-added products in home appliance businesses.

Among its business units, the Device Experience (DX) division, which includes smartphones, mobile devices, TVs and other consumer electronics, recorded sales of 51.7 trillion won and an operating profit of 4.7 trillion won. This represents a 28 percent growth in sales compared to the previous quarter.

However, the chipmaking Device Solutions (DS) division posted sales of 25.1 trillion won and an operating profit of 1.1 trillion won in the January-to-March period. The sales improved 8.47 percent year-on-year, but operating profit plunged by 42.4 percent year-on-year.

The company explained that this is largely due to weakened sales of HBM chips.

In December last year, the U.S. Department of Commerce added all currently produced HBM products to its list of export-controlled items to China. Before the ban took effect this year, Chinese companies preemptively stockpiled large volumes of Samsung Electronics’ HBM chips in anticipation of tighter regulations. As the direct HBM sales to China were blocked starting this year, the company is believed to have been negatively impacted.

A recent U.S. decision to tighten export controls on Nvidia’s H20 AI accelerator heading to China is also assumed to have affected the weakened HBM sales. Samsung is known to be one of the major suppliers of HBM3 chips for Nvidia’s H20.

“In the case of our HBM products, a temporary drop in demand occurred as customers shifted to newly improved versions, while export restrictions on AI-related semiconductors resulted in lower sales compared to the previous quarter,” the company said during an earnings call.

Samsung Electronics' plant in Pyeongtaek, Gyeonggi Province / Courtesy of Samsung Electronics

The outlook for the second quarter is more concerning due to growing uncertainties stemming from Washington’s tariff measures.

The Donald Trump administration has so far imposed a 10 percent base tariff on all countries while reprieving additional “reciprocal” tariffs for most countries. Chips were exempted from the base and reciprocal tariffs, but the U.S. has already signaled the possibility of imposing a separate 25 percent item-specific tariff on semiconductors.

Against the backdrop, the U.S. is tightening export controls on semiconductors targeting China, raising concerns that demand for overall IT devices could weaken further.

Regarding memory chip demand, the company noted that customers had made early supply requests in the second quarter to build up inventory in advance. However, this front-loaded demand could potentially have “a negative impact on demand in the second half of this year.”

“The recent volatility in tariff policies and rising geopolitical tensions among major countries have made it difficult to predict the impact on business and to establish effective countermeasures,” Samsung Electronics Chief Financial Officer Park Soon-cheol said.

“We are managing risks by carefully preparing countermeasures for each scenario, aiming to turn this challenge into an opportunity for renewed growth. We are also reviewing strategic and flexible use of our global production bases and sales hubs around the world.”