Samsung Electronics on Tuesday projected a 56% drop in second-quarter operating profit from a year earlier, far worse than analysts expected as its struggling chip business faced U.S. chip curbs on China.

In the June quarter, the company’s operating profit dropped by a sharper-than-expected 56 per cent, largely due to inventory write downs triggered by U.S. export restrictions on AI chips destined for China.

Samsung Electronics reported a 4.6 trillion won ($3.34 billion) operating profit for the second quarter of this year, down 55.94 percent from the same period last year.