Samsung is expected to announce a significant 21% decline in its operating profit for the first quarter of this year, primarily due to ongoing difficulties in its chip business. The challenges faced in the foundry division and delays in launching production at its new chip facility in the United States have exacerbated the situation for the tech giant. In recent months, Samsung has encountered substantial setbacks in its chip operations, which have severely impacted its profitability. Reports indicate that the company even issued an apology to shareholders about its financial challenges, expressing a commitment to remedy the situation.

However, the outlook remains bleak, as the anticipated drop in profit reflects the struggles within the chip sector. According to LSEG SmartEstimate, Samsung’s operating profit for the January-March quarter is projected to be around 5.2 trillion KRW ($3.62 billion), a significant decrease from 6.6 trillion KRW ($4.5 billion) reported during the same quarter last year. The decline is largely attributed to sluggish sales in AI chips and losses in the contract-based chip manufacturing business. Furthermore, Samsung has struggled to keep pace with its competitor, SK Hynix, particularly in supplying advanced memory chips to major players like NVIDIA.

In addition to challenges in the chip market, where demand for high-end products is waning, Samsung has had to shift its focus toward low-end memory solutions for Chinese customers. Compounding these issues, prices for DRAM and NAND flash chips have plummeted, with drops of approximately 25% and 50%, respectively. Moreover, the company’s foundry division has faced difficulties in securing significant deals for advanced chips, and delays in launching its new US chip production facility could push the start date to 2027, further complicating Samsung’s recovery efforts.