Samsung Electronics warned investors its Q2 performance fell below expectations, flagging an expected 56 per cent year-on-year drop in operating profit due partly to US restrictions on supply of advanced AI chips for China.

In a stock market disclosure released ahead of its formal Q2 results announcement scheduled for the end of July, the electronics giant revealed it expects to report operating profit of KRW4.6 trillion ($3.4 billion). Revenue is expected to be flat at KRW74 trillion.

Samsung noted its Device Solutions (DS) division which comprises its Memory, System LSI and Foundry business units suffered from “inventory value adjustments and the impact of US restrictions on advanced AI chips for China”.

It explained earnings from the memory business suffered one-off costs, but pointed to the fact “improved” high bandwidth memory products were “proceeding with customer evaluation and shipments for key customers”.

Financial Times and various other news outlets reported the company is currently supplying high-performance memory product HBM3E to AMD and Broadcom, but is still awaiting Nvidia’s approval of its performance.

Samsung noted outside of memory, the unit suffered “sales restrictions and related inventory value adjustments stemming from US export restrictions on advanced AI chips for China, as well as continued low utilisation rates”.

For H2, Samsung forecasts a “gradual recovery in demand”.