The operating profit of South Korean tech giant Samsung Electronics Co sank almost a third in the fourth quarter of last year owing to spending on research, the company said yesterday, as analysts said it was struggling to meet demand for chips used in artificial intelligence (AI) servers.
The world’s largest memorychip maker had already acknowledged in October last year that it was facing a “crisis,” and acknowledged questions had arisen about its “fundamental technological competitiveness and the future of the company.”
Samsung said operating profit fell to 6.5 trillion won (US$4.5 billion) in October-December, from 9.18 trillion won in the previous three months. However, it was up 130 percent year-on-year.
Photo: EPA-EFE
Sales rose 11.8 percent to 75.78 trillion won and net profit rose 22.2 percent to 7.75 trillion won year-on-year, topping forecasts according to Yonhap News Agency.
The firm said the fourth-quarter fall-off was down to “soft market conditions especially for IT products, and an increase in expenditures including R&D,” as well as the “initial ramp-up costs to secure production capacity for cutting-edge nodes.”
It warned that in the first three months of this year “overall earnings improvement may be limited due to weakness in the semiconductors business.”
US titan Nvidia Corp, whose semiconductors power the AI industry, has been relying on SK Hynix Inc as its main supplier of high-bandwidth memory (HBM) chips for its AI graphics processing units (GPU), while Samsung has been struggling to meet the US firm’s requirements.
Still, Bloomberg reported yesterday that Samsung had obtained approval to supply a “version of its fifth-generation high-bandwidth memory chips” to Nvidia, citing people familiar with the matter. Samsung declined to comment on the report.
The earnings figures come as industry leaders try to assess the outlook for the sector after Chinese start-up DeepSeek (深度求索) unveiled a groundbreaking chatbot that performed as well as AI pacesetters — apparently for a fraction of the cost.
News of DeepSeek’s new R1 chatbot has sparked a rout in tech titans and raised questions about the hundreds of billions of dollars invested in AI in recent years.
Worries about the impact of DeepSeek battered stocks in Seoul yesterday as the market reopened after an extended break.
Samsung ended down more than 2 percent, while SK Hynix lost 9.9 percent, having earlier plunged almost 12 percent.
Jaejune Kim, executive vice president of Samsung’s memory business, said in an earnings call that the company was “monitoring industry trends considering various scenarios,” as it also supplies HBM chips used in GPUs to various clients.
“While it is premature to make judgements based on the currently limited information, we anticipate that long-term opportunities and short-term risks will coexist in the market,” he said.
He added that Samsung was determined to “actively respond to the rapidly evolving AI market.”
Counterpoint Research vice president Neil Shah said DeepSeek’s “frugal innovation” could potentially slow down or stretch the hundreds of billions of dollars in AI infrastructure investments over the years.
“So, this could be a ‘blessing in disguise’ for Samsung, allowing them to take the time needed to perfect their solution or to lower costs,” he added.
CAUTIOUS RECOVERY: While the manufacturing sector returned to growth amid the US-China trade truce, firms remain wary as uncertainty clouds the outlook, the CIER said The local manufacturing sector returned to expansion last month, as the official purchasing managers’ index (PMI) rose 2.1 points to 51.0, driven by a temporary easing in US-China trade tensions, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The PMI gauges the health of the manufacturing industry, with readings above 50 indicating expansion and those below 50 signaling contraction. “Firms are not as pessimistic as they were in April, but they remain far from optimistic,” CIER president Lien Hsien-ming (連賢明) said at a news conference. The full impact of US tariff decisions is unlikely to become clear until later this month
GROWING CONCERN: Some senior Trump administration officials opposed the UAE expansion over fears that another TSMC project could jeopardize its US investment Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is evaluating building an advanced production facility in the United Arab Emirates (UAE) and has discussed the possibility with officials in US President Donald Trump’s administration, people familiar with the matter said, in a potentially major bet on the Middle East that would only come to fruition with Washington’s approval. The company has had multiple meetings in the past few months with US Special Envoy to the Middle East Steve Witkoff and officials from MGX, an influential investment vehicle overseen by the UAE president’s brother, the people said. The conversations are a continuation of talks that
CHIP DUTIES: TSMC said it voiced its concerns to Washington about tariffs, telling the US commerce department that it wants ‘fair treatment’ to protect its competitiveness Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reiterated robust business prospects for this year as strong artificial intelligence (AI) chip demand from Nvidia Corp and other customers would absorb the impacts of US tariffs. “The impact of tariffs would be indirect, as the custom tax is the importers’ responsibility, not the exporters,” TSMC chairman and chief executive officer C.C. Wei (魏哲家) said at the chipmaker’s annual shareholders’ meeting in Hsinchu City. TSMC’s business could be affected if people become reluctant to buy electronics due to inflated prices, Wei said. In addition, the chipmaker has voiced its concern to the US Department of Commerce
STILL LOADED: Last year’s richest person, Quanta Computer Inc chairman Barry Lam, dropped to second place despite an 8 percent increase in his wealth to US$12.6 billion Staff writer, with CNA Daniel Tsai (蔡明忠) and Richard Tsai (蔡明興), the brothers who run Fubon Group (富邦集團), topped the Forbes list of Taiwan’s 50 richest people this year, released on Wednesday in New York. The magazine said that a stronger New Taiwan dollar pushed the combined wealth of Taiwan’s 50 richest people up 13 percent, from US$174 billion to US$197 billion, with 36 of the people on the list seeing their wealth increase. That came as Taiwan’s economy grew 4.6 percent last year, its fastest pace in three years, driven by the strong performance of the semiconductor industry, the magazine said. The Tsai
RSS