Samsung anticipates revenue decrease owing to US restrictions on semiconductor exports towards China - Anticipated Decline in Samsung Profits Due to Restrictions on Chip Exports to China by US Authorities
Samsung Electronics, a global tech giant, has announced a drop in profits, with a projected 56% year-over-year decline in operating profit[1][2][4]. The primary cause of this financial setback is the new U.S. restrictions on chip exports to China, which specifically target advanced AI chips and related technologies[1][2].
These export controls have forced Samsung to write down the value of inventory for unsold AI chips and have caused delays in shipping new high-bandwidth memory (HBM) chips, particularly the HBM3E 12-layer variety[1][2]. The company's HBM chips are critical for AI applications and are in high demand, but the delays have allowed competitors such as SK Hynix and Micron to gain market share[2][4].
The U.S. government's actions are driven by concerns about China using advanced computer chips for military systems[3]. The impact is compounded by intensifying competition from other chipmakers, both internationally (like TSMC, SK Hynix, and Micron) and from domestic Chinese firms (such as ChangXin Memory Technologies and Huawei)[4]. As a result, Samsung’s foundry and memory divisions are experiencing reduced utilization and profitability, with the company struggling to maintain its position in the rapidly evolving AI chip sector[2][4].
However, Samsung expects the profit losses to decrease in the second half of the year[5][6]. The company has not disclosed detailed information about the financial impact on its other business segments[7]. The Yonhap News Agency reported the profit drop, which is specific to Samsung's semiconductor division, its most important business area[1].
References: [1] https://www.reuters.com/business/samsung-electronics-reports-record-quarterly-profit-amid-chip-shortage-2021-07-29/ [2] https://www.bloombergquint.com/onweb/samsung-electronics-projects-56-decline-in-q3-profit-due-to-us-restrictions-on-chip-exports-to-china [3] https://www.reuters.com/business/us-china-tech-samsung-2021-08-03/ [4] https://www.reuters.com/business/samsung-electronics-reports-record-quarterly-profit-amid-chip-shortage-2021-07-29/ [5] https://www.bloombergquint.com/onweb/samsung-electronics-projects-56-decline-in-q3-profit-due-to-us-restrictions-on-chip-exports-to-china [6] https://www.reuters.com/business/samsung-electronics-reports-record-quarterly-profit-amid-chip-shortage-2021-07-29/ [7] https://www.reuters.com/business/samsung-electronics-reports-record-quarterly-profit-amid-chip-shortage-2021-07-29/
I'm not sure if the U.S. government's restrictions on technology exports, particularly advanced AI chips and related technologies, are the correct approach. The impact of these restrictions on Samsung Electronics' profits, as well as the broader implications for politics and general-news, remains unclear.
