Profit at Samsung Electronics Co’s mainstay chip operations missed market expectations, reflecting the South Korean tech leader’s struggles to catch up in lucrative artificial intelligence (AI) chips.
Samsung’s chip division — typically the biggest contributor to profit — earned 3.86 trillion won (US$2.8 billion) in operating profit in the September quarter, far short of the 6.7 trillion won estimate.
Samsung has lost about a quarter of its value this year, as the once-dominant memory chipmaker struggled to get its latest chips certified by Nvidia Corp for use in AI accelerators.
Photo: Bloomberg
That has provided an unusually long window for rivals SK Hynix Inc and Micron Technology Inc to carve out a commanding lead in the lucrative high-bandwidth memory (HBM) arena. SK Hynix posted a record operating profit of 7.03 trillion won last week.
Demand related to AI and data center servers was strong for Samsung, but mobile chip demand remained weak due to inventory adjustments by some customers, the company said in a statement.
The company also had to contend with a rising supply of legacy chips in the China market, it said. It plans capital expenditures totaling 47.9 trillion won for its semiconductors in the fiscal year and to expand sales of HBM3E and other high-end products.
South Korea’s largest company still reported net income of 9.78 trillion won in the September quarter, beating analysts’ average estimate of 9.14 trillion won, as other parts of the company’s sprawling business helped offset its chip operations. Its stock fell as much as 1.4 percent yesterday morning in Seoul before recouping losses.
Yesterday’s earnings emerged three weeks after Jun Young-hyun, head of Samsung’s chip business, apologized for disappointing results. The company admitted at the time to delays in winning certification for its highest-margin and most advanced HBM3E lineup of chips. Samsung had predicted in July they would go into mass-production by the third quarter.
Meanwhile, SK Hynix affirmed last week it planned to begin supplying its 12-layer HBM3E in the fourth quarter.
Samsung must now review its organizational culture and processes, Jun said this month, echoing previous comments about the need for fundamental change at one of Korea’s oldest companies.
It has begun laying off workers in Southeast Asia, Australia and New Zealand as part of a plan to reduce global headcount by thousands of jobs, Bloomberg News reported.
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