Earnings call transcript: Samsung Q2 2025 sees revenue decline, new AI products

Samsung Electronics reported a decline in revenue for the second quarter of 2025, with total revenue decreasing by 5.8% quarter-on-quarter to 74.6 trillion KRW. Operating profit also fell significantly, reflecting challenging market conditions and currency impacts. According to InvestingPro analysis, Samsung currently appears undervalued based on its Fair Value assessment, suggesting potential upside for investors despite recent headwinds. Despite these financial setbacks, Samsung introduced new AI-enhanced products, including the Galaxy Z Fold 7 and Z Flip 7, and outlined a strategic focus on AI-driven growth for the remainder of the year.

Key Takeaways

• Revenue decreased by 5.8% to 74.6 trillion KRW.
• Operating profit declined by 2 trillion KRW, impacted by currency effects.
• New AI-integrated products launched, including the Galaxy Z Fold 7.
• Anticipated rebound in performance for the second half of 2025.
• Strong market position in memory and premium smartphone segments.

Company Performance

Samsung’s overall performance in Q2 2025 was marked by a decline in revenue and operating profit. The company faced headwinds from a strengthening Korean won, which negatively impacted profits by 0.5 trillion KRW. Despite the financial downturn, Samsung maintained its leadership in the memory market and continued to innovate with new product launches. The company’s robust financial health is reflected in its strong gross margin and consistent dividend payments, as highlighted in InvestingPro’s comprehensive analysis, which includes over 30 additional key metrics and insights available to subscribers.

Financial Highlights

• Revenue: 74.6 trillion KRW, down 5.8% quarter-on-quarter
• Operating profit: 4.7 trillion KRW, decreased by 2 trillion KRW from the previous quarter
• Operating margin: 6.3%, reflecting a contraction in profitability
• SG&A expenses: Reduced by 0.6 trillion KRW to 20.8 trillion KRW

Outlook & Guidance

Samsung is optimistic about a performance rebound in the latter half of 2025. The company plans to capitalize on the growing demand for AI-driven products across all business segments. Dive deeper into Samsung’s growth potential with InvestingPro’s exclusive Pro Research Report, part of our coverage of 1,400+ top stocks, offering institutional-grade analysis and actionable insights for informed investment decisions. It expects increased demand in the server, PC, and mobile markets, with DRAM bit shipments projected to rise by a high single-digit percentage and NAND bit growth expected at a mid-single percentage.

Executive Commentary

"We are actively driving AI transformation across our whole business to enhance internal productivity and strengthen business capabilities," said Sun Chul Park, CFO. Jejun Kim, Memory EVP, emphasized, "We aim to normalize the HBM business and achieve meaningful expansion in HBM3E sales." Daniel Varahoe, MX Division Representative, noted, "We’re at the forefront of a paradigm shift in smartphone interaction, transitioning from app-centric to agent-centric interfaces."

Risks and Challenges

• Currency fluctuations: The strengthening Korean won poses a risk to profitability.
• Market contraction: The smartphone market is expected to contract slightly year-on-year.
• Tariff impacts: Potential U.S. tariff impacts could affect supply chains and costs.
• Competitive dynamics: Intense competition in the memory and semiconductor markets.
• Macroeconomic pressures: Global economic conditions may influence consumer spending.

Samsung’s strategic focus on AI and innovation, coupled with its strong market positions, positions the company to navigate the challenges ahead and capitalize on emerging opportunities in the tech industry.

Full transcript - Samsung Electronics Co Ltd (005930) Q2 2025:

Operator: a reminder, this call is being recorded. I would now like to turn the conference over to the Investor Relations team. Please go ahead.

Daniel Oh, Head of Investor Relations, Samsung Electronics: Hello, everyone. Thank you for joining us today for Samsung Electronics Second Quarter twenty twenty five Earnings Call. I am Daniel Oh, Head of Investor Relations. It’s my great pleasure to welcome you all to this earnings call. Before we proceed with the presentation, I want to take a moment to address some important housekeeping and legal matters.

As a reminder, you can follow today’s broadcast and presentation deck on our IR website at www.samsung.com/global/ir. Additionally, this call is being recorded and web webcast, and it will be accessible on the same platform for those who wish to review it at a later time. We ask for your full attention and cooperation as we move forward since this session is designed to provide you with comprehensive insights into our financial performance and strategic outlook. We kindly request your attention to the fact that this conference call may include forward looking statements, which are based on our current expectations regarding future events. Please note that these statements are not intended to serve as guarantees of future performance.

Our actual results could differ materially from these expectations due to a variety of factors, including but not limited to market conditions, regulatory changes and operational challenges. We appreciate your understanding and attention to these important considerations as we strive to provide transparent and correct information. With that, I would like to extend my gratitude once again for your presence and participation. Let us now proceed with the presentation, during which I will go through the key highlights of our second quarter performance, capital expenditures and sustainability management, which will be then followed by EVP, Central Park, our Head of Corporate Management Office and CFO, with our outlook for the second half of the year and comments on shareholder returns. We will then turn the call over to our executives, who will take this opportunity to discuss their respective businesses in detail.

Following their presentations, we’ll open the floor to our valued analysts for any questions they may have. Please note that this call is planned to last approximately one hour, and we appreciate your time and attention throughout the discussion. In addition to myself and our CFO, the other executives joining today’s call are Jeo Joon Kim EVP Jeo Joon Kim representing Memory VP Hyuk Man Kwon for System LSI VP Mi Jeong No for Foundry EVP, Joon Young Park for Samsung Display Corporation, who is joining us for the first time and VP, Daniel Araujo for the Mobile Experience last but not least, EVP, KL Ro for Visual Display. Let us comment through the details of our consolidated financial performance for the 2025. Our total revenue decreased by 5.8% quarter on quarter to KRW74.6 trillion.

Turning our attention to the DS division. Sales rose by 11% sequentially driven by increased sales of high value added memory products for server such as HBM3E and TDR5 as well as the expansion of major customers in foundry. In the DX division, revenue declined by 16% compared to the previous quarter due to the diminishing launch effects of new smartphone models coupled with intensified competition in TV and other segments. On the cost management front, SG and A expenses were successfully reduced by KRW0.6 trillion, bringing the total to KRW20.8 trillion. This reduction was achieved through the efficient management of sales and marketing costs, reflecting our commitment to optimizing operational efficiency.

At the company level, operating profit stood at KRW4.7 trillion, representing a sequential decrease of KRW2 trillion compared to the previous quarter. Consequently, the operating margin contracted by 2.2 percentage points, settling at 6.3%. During the second quarter, the DS division, despite the mentioned revenue growth, recognized inventory value adjustments in the memory business and booked one off costs related to the impacts of export restrictions related to China in the non memory business. In the DX division, operating profit declined quarter on quarter weighted on a by sequential decline in sales volume following the launch of new smartphone motors in the first quarter. Regarding currency effects, the relative strengthening of the Korean won against the U.

S. Dollar has adversely impacted our operating profit by approximately KRW0.5 trillion compared to the previous quarter. This impact is primarily observed in our component business where a significant portion of transactions are conducted in U. S. Dollars.

Now turning to capital expenditures. In the second quarter of twenty twenty five, CapEx experienced a decrease of KRW0.9 trillion on a quarter on quarter basis, resulting in a total of KRW11.1 trillion. Of this amount, KRW9.8 trillion was allocated to the DS division, while KRW0.8 trillion was invested in the display business. This strategic allocation reflects the company’s ongoing commitment to optimizing resource distribution across its key business areas, ensuring sustained growth and operational excellence. In memory, investments remained steady quarter on quarter as we continue the transition to advanced nodes, not only strengthen competitiveness in HBM and other high value added products, but also to ensure readiness for anticipated demand.

Foundry CapEx was down quarter on quarter reflecting on a conservative investment approach focusing on line conversions. For display, CapEx increased slightly quarter on quarter due to line upgrades for small to mid sized panels. I will now highlight our key achievements in sustainability management. On June 27, Samsung Electronics published its 2025 sustainability report. The report incorporates materiality assessments that are aligned with global disclosure standards and it features broadened disclosure of climate related scenarios to reinforce compliance with the international requirements.

In the environmental domain, we remain committed to securing renewable energy as we demonstrated by the signing the power new power purchase agreements at key sites. As a result, the DX division achieved a renewable energy transition rate of 93.4%, while in the DFS division, we are scaling efforts to reduce direct carbon emissions by continually expanding the implementation of our internally developed regenerative catalytic system at our production sites. Also, we are committed to reducing Scope three carbon emissions across the value chain. As an example of our diverse initiatives, the application of a high efficiency energy technologies in major products achieved on average power reduction of 31.5% compared to the twenty nineteen levels. Meanwhile, we continue to advance our sustainability goals through the broad application of recycled materials in newly launched Galaxy Z47 and Z Flip seven.

The new models incorporate an additional recycled material compared to their predecessors bring the total number to nine. With the recycled materials accounting for 13.7% of the total weight for the Z Fold 718.2% for the Z Flip seven. Notably, the cathode materials used in the batteries are made with 100% recycled cobalt and lithium. Once again, we reaffirm our unwavering commitment to further enhancing and expanding our sustainability initiatives. We recognize the critical importance of these efforts in addressing global environmental challenges and contributing to a more sustainable future.

Our dedication to this cause remains steadfast and we are actively exploring innovative strategies and solutions to ensure that our sustainability efforts are both impactful and enduring. With that, I will now pass the conference call over to our CFO, Central Park.

Sun Chul Park, CFO, Samsung Electronics: Thank you, Daniel, and good morning, everyone. I am Sun Chul Park, CFO of Samsung Electronics. It’s a pleasure to join you once again on our earnings call. I’ll now present our outlook and review our shareholder return policy. Let’s start with the outlook for the second half.

Despite ongoing global economic concerns driven by uncertain trade policies and the geopolitical tensions, the IT industry appears post for a gradual recovery fueled by increasing momentum in AI and robotics. In this context, we anticipate a rebound in our performance in the second half, following a bottoming out in the second quarter with the earnings expected to improve steadily as the year progresses. In the DS division, we are making on all our efforts to restore fundamental technology innovation. Also, we’ve taken steps to address operational inefficiencies and have reflected inventory value adjustments in the second quarter. Looking ahead, we are truly preparing for a turnaround in the second half.

In addition, we aim to further reinforce our technology leadership and proactively position ourselves to meet the growing demand for high value added and AI driven products. We expect the demand for memory to maintain its momentum across all applications. In this regard, we are actively focused on AI related products such as HBM3E as well as high capacity, high performance offerings. For system LSI, we are working to drive sales growth by enhancing the capabilities of our flagship associates and capitalizing on their rising demand for ultra high resolution image sensors. For our foundry business, we expect a gradual improvement in profitability from expanding our customer base and utilization rates while also strengthening our two nano technology.

In the display business, we anticipate improved results supported by new product launches from key smartphone customers. Additionally, we plan to expand the sales in the IT, auto, monitor and other segments. In the DX division, with the uncertainties stemming from tariff policies likely to persist, we are thinking diverse methods to minimize related impact. In the MX business, we will drive sales of premium mobile AI devices, including our newly launched foldables and aim to lead the market by expanding our ecosystem through innovative form factors like the upcoming Trifold device and our first XLR headset as well as services such as connected health. As the world leading sale of mobile devices, MX will establish a distinctive AI ecosystem through the collaboration with the leading global AI and tech companies by positioning our devices as the central platform of a truly open and advanced AI ecosystem will secure AI competitiveness while continually driving business innovation.

For the VT business, we’ll further solidify our market leadership with strengthened AI features to deliver unique viewing experiences, amid diverse challenges due to stagnant growth and intensified competition in the market TV market. For the DA business, we aim to reinforce the sales of innovative AI based products and focus on aligning the business around high value added segments such as HVAC. Overall, we are actively driving AI transformation across whole business across to enhance the internal productivity and strengthen business capabilities. We will extend our leadership in launching products with the internally developed AI functionalities and maximize product differentiation and the service value by connecting AI infrastructure, models, devices and services. Moving on to shareholder returns.

Today, the Board of Directors approved a quarterly dividend of $3.67 per share for both common and preferred stock. Under our shareholder return policy from 2024 to 2026, the annual payout of regular dividends is set at trillion and the quarterly distribution of KRW2.45 trillion for the second quarter is scheduled for payment in late August. In November 2024, we announced KRW 10,000,000,000,000 based share repurchase program. As of May 2025, we will acquire the shares worth KRW 6,100,000,000,000.0 across two separate phase. The KRW 3,000,000,000,000 worth of shares acquired in the first phase were canceled in February, while the KRW 3,000,000,000,000 worth of shares from the second phase, excluding common shares was trillion, earmarked for executive and employee compensation are scheduled to be canceled in due course.

For the third and final share repurchase of KRW3.9 trillion approved by the Board of Director on July 8, KRW1.1 trillion worth of shares will be allocated for executive and employee stock compensation, including incentives, with the remaining balance of KRW2.8 trillion designated for shareholder returns. We expect to complete the full program on October 8, ahead of the original one year target of November 14. Our primary objective is to fulfill our commitment to shareholders and executing these buybacks more quickly than originally planned shows our dedication to delivering on our promise in a timely manner. The KRW10 trillion repurchase program will be completed as promised And in the near future, we’ll determine the appropriate timing to cancel the repurchase shares aimed at enhancing shareholder value. Thank you.

Daniel Oh, Head of Investor Relations, Samsung Electronics: Thank you, CFO, Central Park. Now each executive from different business segments will provide more detailed information on their respective business units’ second quarter performance followed by their outlook. We will then start with Jejun Kim, EVP of Memory business.

Jejun Kim, EVP Memory Global Sales and Marketing, Samsung Electronics: Good morning. This is Jejun Kim from Memory Global Sales and Marketing. In the memory market in the second quarter, the recovery of demand became more visible than previously expected, thanks to strong AI server demand. And demand for server SSD also increased as previously suspended data center projects resumed. In addition, we saw an increase in the market price for DRAM legacy products as the supply reduced with the impact of the industry’s capacity transition to cutting edge nodes.

In this situation, we increased the sales of HGBM3E products and responded to robust demand for servers, while expanding the portion of high density TDDIO5 products. Moreover, we delivered initial mass products of LPDDR5X for AI servers to the major customer. As a result, compared to the previous quarter, BIG growth for DRAM increased by low teens percentage, in line with the initial guidance. For NAND, we exceeded our BIG guidance as the BIG growth increased by high 20% compared to the previous quarter by actively responding to server SSD demand improvements. Thus, our inventory level decreased significantly.

In the second half of the year, although uncertainties such as tariffs are likely to persist, AI demand should remain robust, thanks to continued investments at major cloud service providers. Therefore, we expect server demand for both DRAM and NAND to remain strong. In addition, our demand for PC and mobile is expected to show momentum, driven by seasonal effects in the second half and the spread of on device AI. We plan to keep operating our business focusing on profitability for both DRAM and NAND in the second half of the year. For DRAM, to align with strong AI server demand, we plan to proactively address the trends toward high density and product diversification with our HBM, high density DDR5, HDDL5X4 AI servers and so on.

For NAND, as we expect inventory levels to be normalized, we will prioritize the sales of high density and high performance SSDs for server and storage. And we will continue to enhance our cost competitiveness by accelerating the transition to V eight for all application. Thank you.

Young Mang Won, System Large Scale Integration (System Large Scale Integration) Business Representative, Samsung Electronics: Good morning. This is YoungMangwon from the System LSI business. In the second quarter, macroeconomic growth forecast is faced a repeated downward revisions, underscoring a notable economic slowdown. Nevertheless, the smartphone market maintained a gradual recovery bolstered by temporary U. S.

Tariff exemption and China’s subsidies. In addition, the launch of new models by major customers further catalyzed component demand, contributing positively to market dynamics. Amid expanding external uncertainties, we delivered resilient performance through strategic product mix optimization and market diversifications. In the SoC business, we commenced mass production and expanded supply of our flagship products utilizing the GAA process, which is specialized in improving performance and power consumption for the future products. Combined with our sensor business’ robust sensor over 200 megapixel tele and wider product lines, these efforts drove record high revenue for the first half of the year.

However, increased development cost for advanced products constrained our extent of profitability improvement. Looking ahead to the second half, the smartphone market is projected to experience a moderate growth momentum. While the first half will benefit from distributors’ inventory buildup to mitigate tariff risk and the impact of Chinese subsidies, demand expansion is expected to be limited as major customers focus on depleting accumulated inventory. In the SoC business, will prioritize stable supply for production models launched in July, while concentrating on securing process and yielding competitiveness for next generation flagship products to secure entry into major customers twenty twenty six lineups. In the sensor business, we will continue to lead the ultra high resolution market and expand the adoption of Nanoprism technology based on products with enhanced low light image quality.

These initiatives aim to sustain revenue and enhance profitability. Through these strategic efforts, we are committed to strengthen our competitive position and driving sustainable growth in the challenging market environment. Thank you.

Mi Jong No, Foundry Business Representative, Samsung Electronics: Hello, everyone. This is Mi Jong No from the Foundry business. In the second quarter, the broader market faced continued headwind from muted mobile demand and persistent U. S.-China trade restriction. Even so, solid momentum in AI HPC application underpinned overall industry growth.

We commenced full scale volume production of three nanometer GE mobile products and expanded sales on the back of strong demand from U. S. And Chinese key customers, resulting in a significant quarter over quarter revenue increase. Even so, U. S.

Export control on advanced AI chips for China led to sales restrictions and related to related inventory value adjustment, while sustained raw fab utilization at mature node weighed on profitability. Despite these challenges, we completed reliability assessments for the first generation two nanometer process, ensuring seamless wetness for mass production. Additionally, we established the technical infrastructure necessary to support customer design enablement for the second generation two nanometer and performance and power optimized four nanometer processes in a timely manner. These efforts bolstered our advanced node competitiveness, enabling us to secure increased orders from major customers. In mature nodes, we enhanced our specialty process capabilities by completing the development of PPAC optimized low power FinFET process for image sensor applications.

This has allowed us to actively pursue and expand new business opportunities. Looking to the second half, geopolitical uncertainty driven by intensifying U. S.-China technology rivalry and potential U. S. Semiconductor tariff policies will likely persist.

Nevertheless, robust AI and HPC demand is expected to sustain strong growth and advanced nodes. We anticipate revenue improvement in the second half driven by the full scale mass production of new mobile products using the first generation two nanometer process. By continuing to expand sales to Chinese and U. S. Customers with a strong demand, we aim to simultaneously enhance web utilization rates and profitability.

In advanced nodes, we will focus on stabilizing the two nanometer process while ensuring mass production readiness for automotive grade four nanometer processes supported by stable yields. Furthermore, we will strengthen our advanced node portfolio by securing 2.5D three d advanced packaging technologies. For mature node, we will enhance our competitive edge and specialty technologies, including 14 nanometer automotive, RF millimeter wave and 17 nanometer DDI platforms. By leveraging these advancements, we will actively pursue new business opportunities and expand the customer orders. Thank you.

Jun Young Park, Samsung Display Representative, Samsung Electronics: Good morning. This is Jun Young Park from Samsung Display. I will now brief you on our results for the second quarter. For the mobile display business, we achieved revenue growth compared to the previous quarter despite the sales stagnant demand in the smartphone market. The growth was supported by timely supply of new smartphone products to our major customers and increase in sales for IP and automotive segments.

For the larger display business, sales volumes for TV and monitors increased quarter on quarter, driven by strong performance of QD OLED. In detail, we responded to our major customers’ needs in the TV market. And for monitors, following our high resolution products, we further strengthened our premium lineup with the launch of 500 hertz refresh rate model and achieved sales growth, especially in the gaming market. Now I will share our outlook and strategies for the second half of the year. For the mobile display business, we expect our sales to increase as our major customers launch flagship smartphones.

However, uncertainties are likely to persist due to external factors such as tariff. In response, we will concentrate on driving sales growth and maintaining our leadership in the smartphone market by further enhancing our differentiated technologies. These include the world’s first commercialized polarizer free technology, which enables low power consumption as well as slim foldables with enhanced durability. We will also continue to expand the sales in IT and automotive segments. Lastly, I will discuss our outlook for the larger display business.

In the premium TV market, the OLED adoption rate continues to rise. In the second half, we will not only address demand for TVs, but also strengthen our market presence in the premium segment by continually developing high performance products. In addition, we expect QD OLED monitors to continue their strong momentum, driven by rising demand for gaming monitors. By offering diverse refresh rates, we aim to broaden our product lineup across both B2C and B2B sectors, accelerating the penetration of QD OLED in the monitor market. Thank you for listening.

Daniel Varahoe, Mobile Experience (MX) Division Representative, Samsung Electronics: Hi, everyone. This is Daniel Varahoe from the MX division. Let me share our results for Q2 as well as our future outlook. The smartphone market remained seasonally down in Q2 with demand declining compared to the previous quarter. For the MX business, Q2 saw smartphone shipments of 58,000,000 units, tablet shipments of 7,000,000 units and the smartphone ASP of two seventy dollars While smartphone shipments decreased compared to Q1 when our new flagship models were released, both revenue and operating profit showed year on year growth.

This was made possible by robust sales of flagship models, especially the S25 series, as well as strong performance across our major products, including the A Series and tablets. Some components, including memory and displays, saw a slight decline in price versus last year, while we also continued initiatives focused on resource efficiency. And as a result, we maintained double digit profitability in Q2. Moving on to the second half of the year. Overall smartphone demand is expected to contract slightly year on year due to concerns about rising tariffs in mature markets and the continued slowdown driven by persistent inflation.

However, the premium segment is projected to grow modestly driven by shifting consumer preferences toward higher end products due in part to economic growth in emerging markets. While the tablet and wearable markets are also expected to decline year on year due to macroeconomic uncertainties, the TWS market is poised for growth as adoption expands in emerging markets. For the MX business, we expect an increase in smartphone shipments and ASP in the third quarter, while tablet shipments are expected to decline sequentially as we transition to new models later in the year. We will continue our flagship first approach in the second half, and we are confident in the strong market reception of our newly launched seventh generation foldable products, which feature significant advancements in performance, design and durability. The Galaxy Z Fold seven, the thinnest and lightest model in the Fold series to date, combines the portability of a bar type phone with the expansive display of a tablet, featuring ultra level features such as a 200 megapixel camera.

The Galaxy Z Flip seven delivers improvements in two key areas, design and portability, and optimizes the Galaxy AI experience for the larger flip cover screen. With the integration of One UI eight optimized for the foldable form factors, alongside an expanded lineup, we aim to drive new demand and broaden our customer base. For the Galaxy S25 series, we will focus on maintaining sales momentum with seasonal promotions as well as an earlier launch of the S25 FE. We are also strengthening the A Series lineup with new entry level models, while emphasizing awesome intelligence and extended OS upgrades to differentiate our product experience. Furthermore, we’re expanding channel presence in growth markets to increase our market share.

Beyond smartphones, we are accelerating our ecosystem strategy in the second half of the year with a range of new products designed to maximize Galaxy’s competitive edge, including a next generation form factor. First, we are set to release the Galaxy Tab S11 series powered by enhanced AI capabilities and new mid tier and entry level models will complete our portfolio. In wearables, the recently launched Galaxy Watch eight Series introduces a bold new cushion design across all models and integrates Gemini for innovative AI functionality. With the refresh of the Galaxy Watch Ultra model for 2025 and the return of the Galaxy Watch Classic after a two year hiatus, we are poised to strengthen our position in the premium wearable market. In addition, with the pending acquisition of U.

S.-based digital healthcare company ZELF, we aim to accelerate the transformation of Samsung Health into a connected care platform. In TWS, our Galaxy Buds lineup will expand in order to address demand across all price segments. Meanwhile, we are also preparing to introduce next generation innovative products, including our XR headset and Trifold smartphone this year. Our XR headset, which seamlessly integrates the XR ecosystem developed in partnership with Google, as well as multimodal AI capabilities, will serve as a key stepping stone in solidifying our leadership in future technologies and further expanding the Galaxy ecosystem. Despite ongoing macroeconomic uncertainties and anticipated increases in material costs, the MX division will focus on expanding flagship sales and our ecosystem business with a focus on new premium products.

We will also continue to optimize operations across the board in order to maintain robust profitability. Thank you.

KL Lo, Visual Display Sales and Marketing Team Representative, Samsung Electronics: Hello, everyone. I’m KL Lo from the sales and marketing team of Visual Display. Let me brief you on the market condition and our results in the 2025. In the second quarter, TV market demand is projected to decrease slightly year on year due to the impact of last year’s big sporting event. However, demand for premium and big TV remained solid.

For Samsung, we expanded the sales portion of premium products by driving sales of Neo QLED, OLED and SuperVic TV. Even so, our profitability decreased year on year due to stagnant TV market demand, declining the sales and increased cost, driven by intensified competition. Now let me go over the outlook for the 2025. In the second half, TV market demand is expected to decrease slightly year on year as economic uncertainties raise the concern over inflation. However, the growth trend of high value added products, including QLED, OLED and SuperBic TV will continue.

For Samsung, based on the new lineup with enhanced AI feature and viewing experience, we will preemptively capture peak season demand and achieve a turnaround in sales growth. In addition, we will reinforce growth engine by enhancing communication of our key strengths such as SmartThings, NOx Security, Slim Design and App Store. Lastly, with an unmatched leadership in global TV sales for nineteen consecutive years, the service business will drive solid profitability and growth momentum by advancing TV plus content and advertisement. Thank you for listening.

Daniel Oh, Head of Investor Relations, Samsung Electronics: Many thanks to all the executives who present their business updates. That concludes our presentation on second quarter performance of 2025 and brings us to the Q and A session, which will be conducted in Korean. Given that the company’s presentation lasted longer than we expected, we will try to get receive as many as questions as we can today. Questions regarding company wide matters will be addressed by our CFO, Central Park, and the other business segments will be answered by each business representative. Operator, you may now open the line for analyst questions.

Operator: We will now begin Q and A session. The first question will be made by Simon Woo from Bank of Korea. Thank you for the opportunity. I am Udong jae from Bank of America. I’d like to ask about tariff impacts.

This morning there was a news article that U. S. Korea have reached an agreement on trade. How will it impact your business and what’s your response strategy? We believe that the conclusion of the negotiations between Korea and The U.

S. Has helped to reduce uncertainties. We will actively monitor the detailed aspects of the agreement by closely paying attention to the follow-up discussions between the two governments and will prepare response measures accordingly. Additionally, in mid August, the U. S.

Department of Commerce’s Section two thirty two investigation on semiconductors and derivative products is expected to be announced and we are paying close attention to the results. Considering the investigation includes semiconductors along with smartphones, tablets, PCs, monitors and other end products, the findings may significantly impact our business. We’ve been sharing our views on the Section two thirty two investigation directly and indirectly and are in communication with the relevant authorities of both countries. Potential risks and opportunities stemming from both the investigation and agreements will be thoroughly analyzed to prepare response measures in a way that minimizes the impact on our business. Thank you.

Daniel Oh, Head of Investor Relations, Samsung Electronics0: Yes, thank you very much. We will move on to the next question please. The next question will be made by Mr. SK Kim from Daiwa Securities. Please go ahead.

Yes, morning. Thank you for the opportunity to ask some questions. I’m Sung Kyu Kim from Daiwa. I have some questions regarding your foundry business. So I think there was a recent announcement about the large scale order win.

So if you could elaborate more on those details. And does this mean that there’s a likelihood of increased CapEx either this year or next year, including at the Taylor fab? Yes. Let me answer the question on the foundry business. Well, regarding the major client award, I would like to first seek your kind understanding.

We’re not able to comment on detailed contractual terms. That being said, we have won a $16,500,000,000 order from Tesla for a next generation product to be built based on our advanced process technology, which demonstrates the competitiveness of our advanced process capabilities. So with this as an inflection point, we hope to win additional orders from other major customers and we expect it to help boost higher and more stable fab utilization at our advanced nodes, including the Taylor plant, which will in turn help boost revenue and profits. Regarding investments, our goal has been to win next gen chip awards from diverse U. S.

Clients as we set up our new Taylor fab, which is set to ramp up operations from 2026. Currently, we are working to strengthen local execution to ensure timely operations and customer engagement at the new fab. Meanwhile, our investments in the Taylor plant for this year is projected to be inside the scope of our existing CapEx plan for 2025. That said, when considering the ramp up time line for the Taylor fab, we’d expect higher CapEx in 2026 versus this year. Yes, Thank you.

And we’ll move on to next question please.

Operator: Next question will be made by Kim Do Kwon from

Daniel Oh, Head of Investor Relations, Samsung Electronics0: JPMorgan. Yes. Thank you very much. This is Kyung Kwan from JPMorgan. I have some questions about memory.

So changes to ASP trends in the second quarter for DRAM and NAND, if you could provide some more details. And then if you look at the tentative earnings disclosure for the second quarter, it does seem that you recorded some one off expenses. So do you expect similar one offs in the third quarter as well? Yes. I will cover your question regarding second quarter performance for memory.

So due to U. S. Tariffs and other geopolitical issues, we did hold a rather conservative outlook on the memory market in the quarter. Later, however, as GPU supply conditions across the industry started to visibly improve, that’s when AI related demand really started to scale. And we saw a clear turnaround in the business cycle from the midpoint of the second quarter onward.

For DRAM legacy products like DDR4 and LPDDR4X, supply declined amid a broad shift in industry capacity to advanced process nodes coupled with anxiety from clients over uncertainty of future supply. This led to a steep increase in market pricing across distribution channels starting in the second half of Q2. Given these conditions, we focused on capturing the short term upside in demand for legacy DRAM like DDR4, LPDDR4X, while boosting sales of advanced products such as HBM3E, DDR5, LPDDR5X and GDDR7. As a result, DRAM bit growth increased by a low teens percentage Q on Q in line with our bit guidance, while inventory decreased to below normal levels. For conventional DRAM, at the start of Q2 based on our conservative market view at the time, we expected ASP to drop by mid single percentage, but pricing actually ended the second quarter up by a low single digit percentage versus the first quarter.

So after declining in Q1, ASP started rebounding in the second quarter, Considering most clients do price negotiations on a quarterly basis, the uptrend in market prices will likely become more fully reflected in ASP starting in the third quarter. For NAND, driven by growing server SSD demand, bit growth increased by a high 20 percentage Q on Q exceeding our prior guidance. And we saw significant reduction in NAND inventory for two consecutive quarters. The rebound resulted in a notable improvement in market conditions, limiting the decline in ASP to a low to mid single digit percentage Q on Q and for some NAND products ASP even increased slightly versus the first quarter. That being the case, Memory business earnings declined compared to Q1 due to one off expenses including inventory valuation adjustments, which were recognized in the second quarter as part of conservative financial management, but this is expected to significantly be reduced in the third quarter.

Thank you.

Operator: Thank you for your answer. We’ll move on to the next question. Sorry, the previous question was made by Kwon Jee hyun from JPMorgan and this question will be made by Kim Dong won from KB Securities. Thank you for the opportunity. I am Kim Dong won from KB Securities.

I’d like to ask you two questions. First, with three major M and As this year, visibility on Samsung strategy seems to be clearing and market expectations for a major M and A deal in the second half are also rising. What’s the company’s M and A strategy? And also for the display part, competition among peers to expand their smartphone market share is intensifying. What is SDC’s response strategy?

First, regarding shareholder expectations on M and A as a means to secure growth engines, we have delivered tangible results this year as promised. Following the acquisition of a controlling stake in Rainbow Robotics at the end of last year, Samsung signed agreements in May to acquire Massimo’s audio division and global HVAC specialist flat group. In July, we started the acquisition process of digital healthcare platform ZElf. These M and As are a part of our strategy to swiftly respond to trends in future growth industries such as AI, robotics, data centers and digital health, while further strengthening our position as a premium brand and enhancing overall customer experiences. In the first half of this year, in addition to M and As, aiming to send future technologies and explore and incorporate with leading tech companies, we made venture investments of over 120,000,000 combined in around 40 companies, mainly in AI, robotics and digital health, marking the largest half year venture investment in Samsung’s history.

Despite the high uncertainties involving geopolitics and tariff impacts, as mentioned at the AGM, as part of our commitment to growth and shareholder value, Samsung will continually review its business portfolio while actively seeking opportunities for inorganic growth. In addition to strengthening the competitiveness of our business, we will proactively address rapid changes in global tech trends to secure technological leadership in a wide range of swiftly evolving industries such as AI, HVAC, medtech, robotics, automotive, electronics, fintech and components. We will share specifics when details are finalized. Thank you. Let me give you an answer for the display part.

As the smartphone market matures, competition is intensifying. We are using differentiated strategies through technological innovation to reinforce our competitive edge. Among them, our polarizer free low power technology named LEED is an industry’s first technology to be developed and mass produced in 2021, where we reduced panel thickness while lowering panel power consumption by over 30%. With the recent expansion of AI, there is a growing demand for low power and high resolution technology in the market. With the aforementioned lead technology, we’ll keep addressing the demand and further strengthen our competitiveness.

Also, as for our foldable products, we have demonstrated our stable technological capabilities and production capacity, through which we have introduced increasingly advanced technologies each year. In the latest foldable product, durability has improved as demonstrated by passing the 500,000 folding tests and with a slimmer panel design competitiveness was also reinforced. To summarize, touch integrated and power efficient technologies that combine LTPS and oxide and other high spec and innovative products have been proactively introduced. Going forward, informed factors like LEED will continue to develop performance and design differentiated technologies. Thank you for your answer.

We’ll move on to the next question. Next question will be made by Ryu Young from NH Investment and Securities. I’m Ryu Young Ho from NH Investment and Securities. I’d like to ask questions about the Amex business. All seven is receiving better than expected feedback.

How are the initial sales trend and sales outlook for this year?

Daniel Varahoe, Mobile Experience (MX) Division Representative, Samsung Electronics: Sure. So in light of stagnation in last year’s foldable product sales, we very thoroughly revisited our consumer insights and reviewed the products from all angles. And so this year, we’ve significantly enhanced the product performance and overall user experience. The Galaxy Z Fold seven and Flip seven, which we unveiled at this year’s New York Unpacked event, reflect technological innovation that surpass what existing foldable smartphones are capable of. They feature slimmer, lighter designs, top tier performance, durability and seamless integration with Galaxy AI to provide real usefulness in people’s everyday lives.

So to provide some figures, the Z Fold seven has a thickness of 8.9 millimeters when folded and only 4.2 millimeters when unfolded, which is half the thickness of our first generation model. And its weight is only two fifteen grams, so the portability is comparable to VAR type smartphones. As I mentioned before, the 200 megapixel camera supports photography on par with the Ultra and the durability has also improved, thanks to enhancements in glass, frame and hinge materials. With the Z Flip seven, we improved it to reflect customer demands in terms of design and portability. The new null cover screen has the thinnest bezel among current smartphones, and it’s actually 70% thinner compared to the previous model, which provides more aesthetic appeal as well as practical functionality.

And we also optimized the new Android OS and One UI eight for our foldable form factors together with Galaxy AI. So in actuality, initial results are showing positive growth, in line with our expectations. We look to continue the strong momentum from preorders into the remainder of the second half and aim for double digit foldables growth compared to last year. Thank you.

Operator: Thank you for your answer. We’ll move on to next question.

Daniel Oh, Head of Investor Relations, Samsung Electronics0: The next question will be by Mr. Sejal Lee from Citi Securities. Please go ahead. Yes, this is Sejal Li from Citigroup. I have some questions about your memory business.

So there is actually a great deal of market interest still in Samsung Electronics HBM business. Could you elaborate more on second quarter HBM performance as well as future plans, including for HBM4? And then another big theme is hybrid copper bonding technology. So if you could provide a progress update on the future technology, please? Yes, I will take your question on our HBM business.

In the second quarter, HBM bit shipments increased by 30% Q on Q and the share of HBM 3E from overall HBM sales volume has increased further to a high 80% level. So our goal is to normalize the HBM business. And so we plan to achieve a meaningful expansion in HBM3E sales in the second half versus the first half. We’ve been steadily securing demand customer by customer by obtaining mass production approval and we expect HBM3E as a share of total HBM revenue to exceed the high 90% range in the third quarter. We have obtained mass production approval for 1C nano mother dies and we have developed samples of HBM4 based on the 1C process, which have been shipped out to some of our major clients.

Our HBM4 products offer optimized design with the base die fabricated using advanced logic process delivering twice the performance of earlier generation HBM3E with significant improvements in energy efficiency. As we anticipate HBM4 demand to enter into full scale, we intend to expand timing supply in alignment to the rising demand and we continue to make investments in 1C nano capacity expansion. So next generation stacking technology, hybrid copper bonding has been drawing a lot of potential among customers and we are in discussions with key clients on the technology in the context of volume production. Yes, thank you. We will move on to the next question please.

The next question will be by analyst Min Soo Che from Korea Investment Securities. Yes, thank you for the opportunity to ask a question on foundry. So I would like to hear more about your future advanced process roadmap for foundry, what will be the overall direction? It seems not just for Samsung, but competitors are also moving toward two nano volume production. So what is your differentiation strategy in that case?

Yes. So we have been working to enhance the competitiveness of our advanced process technologies as we seek and obtain more supply orders from large scale clients. In terms of our advanced node roadmap, development of two nano nodes is currently underway with the goal of achieving greater performance and maturity. And this is part of our long node strategy where we seek to deliver a advanced process node with high degree of execution. Every year as new processes are developed, we face various challenges in terms of yield, maturity of performance and timely acquisition of core IP.

So to resolve these difficulties, we wish to go beyond our existing single track roadmap to adopt a two track development approach that distinguishes between leading technologies versus platform technologies. For a new process development, we will work out yield maturity, etcetera, with a small number of lead customers and building on that as a base. Then the strategy would be to then open up and make the platform technology available to other global customers across diverse application and end markets once we acquire Core IP. We want to minimize process variation between generations, focus on improving SI maturity while using design technology co optimization for additional performance enhancements and this will help solidify the foundation for future growth.

Operator: Thank you. We’ll move on to the next question. The next question will be made by Baek Ki Leung from Yuante Securities. Thank you for the opportunity. With the recent acquisition of FLAG Group, there is growing interest in your HVAC business.

What’s the HVAC market outlook and your strategy for the HVAC business, including the acquired company? VP, Uchi kan will answer the following question on the DA business. Okay, let me give you my answer. The global HVAC market as of 2024 is valued at approximately $180,000,000,000 with global warming AI data centers and increasing demand for green products, the market is forecast to keep growing. In line with this trend, we’ll not only expand our current business, but also acquire and cooperate with leading global players to foster our HVAC business as a future growth engine.

Currently, our business operates in Douglas HVAC segment. However, through the joint venture established with LINAHLX last July, we are expanding our business in North America, the world’s largest air conditioning market. With the recent acquisition of FLAG Group, we’ll broaden our business scope into the central HVAC segment, while also enhancing our position as a pure HVAC player. Flat Group and Lennox’s outstanding capabilities and SmartThings energy technology will be incorporated to lead the market trend in energy saving. And we’ll also expand into specialized markets such as data centers, biotech and commercial applications.

Beyond our current Douglas business, we’ll enter the Central HVAC segment and secure maintenance packages for energy savings and operational costs optimization to build the foundation for a global top tier HVAC business. Thank you. Thank you for your answer. We’ll move on to the next question. Next question will be made by Han Dong Yi from SK Securities.

You may proceed. I am Han Dong yi from SK Securities and thank you for the opportunity. I have two questions. First, I’d like to ask about the MX business. What’s your profitability outlook for the second half?

And what’s the direction of your AI strategy? And next, I’d like to ask about System LSI. The Xynos has reentered your recently launched flagship model and what improvements make this reentry possible? And can you talk about whether it’s likely to be adopted again in the 2026 flagship model?

Daniel Varahoe, Mobile Experience (MX) Division Representative, Samsung Electronics: So first on the MX second half profitability outlook. Given the uncertain external environment, including potential increased tariff burdens due to changes in U. S. Trade policies and currency fluctuations, memory prices are expected to rebound beginning in Q3. Despite the challenging business conditions, we’re aiming to increase smartphone revenue focused on our flagship models with the momentum of our new foldables as well as maintaining the sales momentum of our S25 series.

We’re also aiming to expand sales of our ecosystem products like the Galaxy Tab S series and Galaxy Watch Ultra, driving growth especially in premium products. We’ll also continue efforts in cost reduction, process optimization and eliminating inefficiencies in order to secure robust profitability. For the AI strategy, we’re focusing on enhancing the performance of Galaxy AI in order to improve the user experience and deliver more real world value. We’re at the forefront of a paradigm shift in smartphone interaction, which is a transition from app centric to agent centric and from touch centric to multimodal interfaces. We’re aiming for a more personalized and intuitive AI experience by evolving into an open platform that connects to various AI agents and optimizes the interaction depending on the user need.

So to get there, we are equipping our devices with optimal hardware components such as the AP and memory, while also researching and developing software technologies that maximize the performance of on device AI, improve the processing speed, make models more lightweight, while also being optimized to our systems. We have strategic collaborations to deeply integrate AI across the range of Galaxy devices as we continue to expand and develop the Galaxy AI ecosystem. Together with Google, we implemented the cross app interface in the S25, which leverages the agent to let users take action across multiple apps with one single prompt, vastly simplifying complex tasks. And as another example, the Gemini Live feature enables real time camera and screen sharing, a multimodal AI experience that understands and responds to what the user is feeling. We’ve optimized these features for the new Fold seven and Fold seven and we’ll continue to evolve our AI functionality and its usability for future devices as well.

Thank you.

Daniel Oh, Head of Investor Relations, Samsung Electronics0: Yes. Let me take your question on System LSI. So Exynos 2,500 made a successful entry into a foldable model that was released in July. It’s improved AI performance and camera functions. We want to build on this success to expand into other new models.

The next flagship Exynos 2,600 will be the first flagship chipset fabricated on the latest two nano gate all around process. We’re working closely with the foundry division on development to secure the required yield and performance, so that we can enter the flagship models of key customers in the 2026. Exynos 2,600 offers a significant improvement in NPU performance versus prior version with enhanced support for on device AI functionality, which will allow users to leverage AI functions in a more comfortable setting. We plan on leveraging two nano as our long node for the future and we’re working closely with the foundry division to enhance the process maturity with Exynos as a bridgehead for securing competitiveness of future products. Because of the time, we will accept one last question.

It will be by Joon Lee from Goldman Sachs. Please go ahead. Yes, thank you for the opportunity to ask one question on memory. What is your outlook for the memory market in the second half? There are some recent concerns about competition becoming even more intense in the HBM market.

So what is your outlook for memory over the second half of the year? Okay. So let me answer your question about our outlook. For the server market, there’s been a rapid rise in paid subscribers for AI services. So CSPs and also have been expanding their foreign services as well, which is driving investments into underlying infrastructure.

Supply conditions have been improving for GPUs and ASICs, which are critical for building out infrastructure. So we expect accelerated growth in demand from AI server applications in the second half. Moreover, we expect robust continued demand for conventional servers and storage for general computing that is required for pretreating data in AI applications. For PC, we expect upside demand momentum from end of year promotions as well as other seasonal demand drivers, also the end of support for Windows 10. For mobile, we project growing demand for high performance, high density products driven by greater on device AI trends, aligned with new product launches by major customers.

So boosted by the overall boost in demand across applications, market prices are expected to increase by a greater margin in the second half for DRAM, while NAND is also expected to see an overall rally in pricing from the third quarter. However, the exact extent of price increases will vary by product depending on supply demand dynamics. We expect we believe prices of products in legacy DRAM and planar NAND where there’s increasingly tight supply may rise by bigger extent in relative terms. So although legacy memory prices are expected to rise, we will continue to focus on advanced node migration for DRAM and NAND to secure competitiveness in the mid to longer term. We will expand sales of diverse offerings that we have been preparing in expectation of increased growth in AI over the mid to longer term.

For DRAM outside of HBM, we’ve also been expanding sales of high density LPDDR5X for AI servers, also high density DDR5 RDIMM 128 gigabyte and above, 24 gigabit GDDR7 as well where we already hold a leading position. In the third quarter, we’ll commence mass production and supply of SOCOM as well as reinforce our AI product portfolio. In the third quarter DRAM bit shipments are expected to increase by high single percentage Q on Q. For NAND, we will speed up V eight migration across all applications including servers to strengthen cost competitiveness, while also increasing the share of server SSD sales for better margins. Server SSDs in particular, together with product leadership in Gen five TLC SSDs, we have we have obtained a series of customer approvals for high density 64, 128 terabyte QLC SSDs, which puts us on good track to boost AI server application sales in the second half.

This is why we project NAND bit growth at around mid single percentage for Q3. Regarding intensifying competition for HBM. For HBM3E supply has grown faster versus demand. So we anticipate supply demand dynamics to change, which will likely impact market prices for the time being. And considering the upward pricing momentum for conventional DRAM, so far the second half based on current signals and also near term expectations, we believe the difference in margins between HBM3E and conventional DRAMs is expected to narrow sharply.

So to optimize profitability in the short term, this may mean greater need for a more balanced product mix strategy. However, for us, given the strong mid to long term demand for HBM driven by AI, We intend to focus on addressing demand for HBM3e, while strengthening tight cooperation with customers for commercialization of HBM4 as well. And as an extension, we will continue to develop products for the future, including custom HBM, while continuing with necessary relevant investments as well. Thank you.

Operator: Thank you for your answer. I’d like to thank everybody who shared their valuable opinion and we’ll be sure to refer to them in our decision making process. That completes our conference call for this quarter. We wish all of you and those close to you stay strong and in good health. Thank you very much.

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