SAMSUNG Electronics estimated on Tuesday (Oct 8) that its third-quarter operating profit jumped nearly four-fold but missed analysts’ estimates, prompting a rare apology from the tech giant for lagging rivals in the booming artificial intelligence (AI) chip market.
The world’s largest memory chip, smartphone and TV maker estimated an operating profit of 9.1 trillion won (S$8.8 billion) for the three months ended Sep 30, versus a 10.3 trillion won LSEG SmartEstimate.
That would compare with 2.4 trillion won in the same period a year earlier and 10.4 trillion won in the preceding quarter.
Samsung’s share price, which has fallen more than 20 per cent so far this year, fell 1.2 per cent after the earnings guidance.
The company has been the world’s biggest memory chipmaker for three decades but it is battling growing competition in both conventional and advanced chips.
High-margin chips used in AI servers are driving a recovery in the chip market after a post-pandemic downturn last year. Still, Samsung has lagged behind SK Hynix in supplying high-bandwidth memory (HBM) chips to AI leader Nvidia.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
“We have caused concerns about our technical competitiveness, with some talking about the crisis facing Samsung,” Young Hyun-jun, vice-chairman, Device Solutions Division, Samsung Electronics, said.
“These are testing times,” he said, pledging to turn the challenge into an opportunity and focus on enhancing long-term technological competitiveness.
In a further challenge, Samsung said that sales of its high-end HBM3E chips to an unidentified major customer have been delayed. It did not elaborate on the issue.
Earnings declined in the company’s memory chip business as Chinese chip rivals increased supplies of “legacy” products” and some mobile customers adjusted inventories, offsetting solid demand for HBM and other chips used in servers, Samsung added.
Demand remains lacklustre for commodity chips used in PCs and smartphones upon which Samsung relies more than rivals, analysts said.
In May, Samsung abruptly replaced the chief of its semiconductor division, handing the reins to Jun in a bid to overcome a “chip crisis”. REUTERS
