The profit of South Korean electronics giant Samsung KR7005930003 fell for the first time since 2023.

This reflects the company's increasing market share losses, which are clouding Samsung's prospects in the currently dominant field of artificial intelligence (AI). Operating profit fell by 56 percent to 4.59 trillion won (2.86 billion euros) in the second quarter, the company announced in Seoul on Tuesday based on preliminary figures. The profit decline for the electronics company, which competes with Apple in the smartphone business, was thus significantly higher than experts expected. Samsung shares fluctuated between gains and losses.

Samsung said it attributed the sharp decline in profits to the US government's export restrictions on AI chips to China. These regulations also affect products from international companies if they contain US technology. China is an important sales market for Samsung. As a result of the restrictions, the South Korean company had to make significant inventory write-downs. Sales remained flat at 74 trillion won.

In addition, the punitive tariffs threatened by US President Donald Trump are likely to further weigh on Samsung's business prospects. These figures are only initial estimates. The company will release more precise figures at a later date, probably by the end of the month.

Samsung has lost ground to competitors such as SK Hynix and Micron US5951121038 in the field of ultrafast AI chips. Further complicating matters is the fact that US restrictions on technology exports to China are making it difficult to turn around its loss-making chip manufacturing business. Nevertheless, Samsung expects demand to recover and indicated that operating losses in its contract chip business will narrow in the second half of the year.

Some investors also expect the chip and smartphone manufacturer to have bottomed out in the summer. The one-time inventory write-downs suggest this, says Sanjeev Rana, an expert at CLSA Securities Korea. "Looking beyond the disappointing second-quarter results, we expect a sequential recovery." AI computing leader Nvidia US67066G1040 is focusing on a new generation of memory chips, which could present a new opportunity for Samsung.

The key for Samsung now lies in the next generation of AI chips. So far, the company has not received certification from Nvidia for its most advanced chips. Hynix is ​​benefiting from this, and Micron is also making significant progress in the lucrative market.