In 2025, Samsung Electronics' operating profit is expected to decline significantly. According to Reuters, Samsung Electronics forecasts its operating profit for the first quarter of 2025 to be about 5.2 trillion won ($3.62 billion), down 21% year-on-year from 6.6 trillion won ($4.6 billion) in the same period last year. The forecast not only hit market confidence, but also made people re-examine the semiconductor giant's ups and downs over the past year and a half.
1. The loss of HBM chip market: strategic misjudgment and technology gap
Samsung's failure in the high-bandwidth memory (HBM) chip market is one of the core reasons for the decline in profits in its semiconductor division. HBM chips are the key supporting components of AI chip systems, and their performance and power consumption directly determine the overall efficiency of AI chips. With the explosive growth of generative AI technology, the demand for HBM has skyrocketed, but Samsung has not been able to effectively grasp this growth window.
According to multiple reports, as early as 2019, Samsung underestimated the importance of the HBM market in its internal evaluation, and even disbanded its HBM dedicated R&D team at one point. This decision has left SK hynix far behind in the HBM3 and HBM3E technology paths. In 2024, SK hynix's HBM3 chip yield rate has stabilized at 60%-70%, and it has started to provide HBM3E samples to NVIDIA. In the same period, Samsung's HBM yield rate was only 10%-20%, which could not meet the needs of mainstream AI chip customers.
This technology generation gap is directly reflected in market share. According to TrendForce data, SK hynix's global DRAM market share has increased to 36.6% in Q4 2024, approaching Samsung (36.1%) for the first time. In HBM's exclusive field, on which AI accelerators depend, SK hynix has captured more than half of the market, while Samsung continues to be marginalized.
What's more, the gross profit margin of HBM products is significantly higher than that of traditional DRAM products. The loss of the HBM market not only means that Samsung has lost its technical voice in the AI era, but also directly leads to pressure on the profit margin of its semiconductor business, becoming the main driver of the current performance decline.
Figure: Samsung Semiconductor is facing many difficulties
2. Sluggish wafer foundry business: 3nm yield crisis
In the field of wafer foundry, Samsung originally planned to rely on GAA transistor technology to surpass TSMC's technology at the 3nm node. However, this did not turn out as expected.
Although Samsung launched the world's first 3nm GAA process in June 2022, as of the end of 2024, the yield rate of Samsung's first-generation 3GAE process still hovers between 50%-60%, far lower than more than 80% of TSMC's mature process. However, its second-generation 3GAP process even has a yield rate of only 20%, which seriously affects customer confidence. According to industry insiders, Samsung's 3nm foundry business has not yet received stable mass production orders from any large customers.
TSMC's dual advantages in technology and production capacity have enabled it to consolidate its cooperative relationships with key customers such as Apple, Qualcomm, AMD, and NVIDIA. According to Counterpoint data, as of Q4 2024, TSMC's global wafer foundry market share reached 67.1%, while Samsung's fell to 8.1%, a significant gap between the two.
In addition, Samsung's foundry customer structure is too dependent on internal business and a small number of external customers, and lacks the broad ecological stickiness of TSMC. This structural disadvantage is more obvious in the competition of advanced processes, and it also makes its role in the global semiconductor foundry industry chain gradually marginalized.
3. Management restructuring: a stable anchor in the midst of uncertainty
At the end of March 2025, Han Jong-hee, co-CEO of Samsung Electronics and head of the semiconductor business, passed away due to a sudden illness. This unexpected event has added more uncertainty to Samsung's semiconductor division, which is already in a critical period of transformation.
Under Han's leadership, Samsung has promoted a number of reform measures, such as strengthening cooperation with Intel and trying to reverse the decline of HBM and foundry business, but they have not been effective in the short term. His death forced Samsung to speed up its organizational restructuring. The company quickly appointed Kim Woo-kyung, the head of the Giheung Campus, as the new head of the DS (Equipment Solutions) department, and said that it would continue Han Jong-hee's established strategic direction.
While the management change adds uncertainty in the short term, it may also bring new impetus to change for Samsung. In the future, whether it can rebuild its technology and market competitiveness with the help of internal resource integration and strategic revision will be the key to determining the direction of Samsung Semiconductor.
4. Mobile and network business has become the pillar of profitability
Despite the heavy blow to the semiconductor business, Samsung's mobile and network business showed solid growth in the first quarter of 2025. According to the company's preliminary forecast, the profit of the sector is expected to reach 3.7 trillion won (about 2.6 billion US dollars), a slight increase from the same period last year.
Key drivers include strong sales of the Galaxy S24 series and foreign exchange gains from a weaker South Korean won. In addition, Samsung's active expansion into emerging markets and the enhancement of the competitiveness of its low-end product line have also made up for the pressure brought about by the saturation of the high-end market to a certain extent.
However, the mobile device market itself is also challenged by a lack of innovation and homogeneous competition. If Samsung wants to maintain its growth momentum, it still needs to make a more forward-looking layout in emerging technologies such as folding screens, AI mobile phones, and satellite communications.
5. Geopolitical risks and supply chain challenges remain unresolved
In addition to technical and management issues, Samsung also faced challenges from the external environment. Policy changes such as the expansion of export controls on advanced chips by the United States, the promotion of local semiconductor independence and control by the European Union, and the tightening of restrictions on critical materials by Japan have made Samsung have to make a more complex balance between the supply chain and the market structure.
In the context of intensifying technology competition between the United States and China, Samsung wants to maintain production capacity and market in China, and must expand investment in the United States to cope with policy compliance pressures. For example, its new fab project in Taylor, Texas, USA, has been repeatedly delayed due to approvals, technical adjustments, and rising costs, affecting the pace of its global capacity deployment.
6. Conclusion: Samsung Semiconductor in the throes of transformation
From the loss of HBM technology, to the yield dilemma of 3nm foundry, to the turbulence of management and the uncertainty of the external environment, Samsung Semiconductor has experienced drastic ups and downs in the past 18 months. All this is not accidental, but the inevitable result of strategic miscalculation, organizational inertia and global geopolitics.
However, Samsung is still a tech giant with strong R&D capabilities and a huge resource base. By accelerating technology catch-up, revising product strategies, integrating internal resources, and restructuring its industrial chain layout on a global scale, Samsung still has a chance to regain lost ground in the future.
The question is: is the time window still there? Is strategy execution decisive enough? Is the market willing to give Samsung a second chance?
2025 may become a key turning point for Samsung Semiconductor's "after the fall".
