Samsung Electronics is striving to recover from disappointing third-quarter results by intensifying its efforts in the competitive AI chip market. The company reported an operating profit of 9.2 trillion won ($6.66 billion) for the July to September period, slightly surpassing its preliminary estimates but showing a decline from 10.4 trillion won in the previous quarter.
The semiconductor division, vital for Samsung’s overall earnings, experienced a significant profit drop to 3.9 trillion won from 6.5 trillion won in Q2, representing a 40% quarter-on-quarter decrease. This disappointing performance has raised investor concerns, prompting a rare public apology from the company. Samsung attributed its challenges to delays in launching high-bandwidth memory (HBM3E) chips, essential for AI applications, and intensified competition from Chinese manufacturers.
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During an earnings call, Executive Vice President Jaejune Kim expressed optimism regarding upcoming sales of HBM3E chips, noting progress in qualifying the product with a major client believed to be Nvidia, which commands an estimated 80% share of the AI chip market. Analysts suggest that securing Nvidia’s approval could be a crucial turning point for Samsung’s semiconductor ambitions, enabling it to regain ground lost to competitors like TSMC and SK Hynix.
In light of these challenges, Samsung is focusing on producing high-end chips and anticipates improved sales in the fourth quarter. While the demand for memory chips in mobile devices and PCs may weaken, the burgeoning AI market is expected to provide a buffer against overall sluggishness in chip demand. As Samsung navigates this tough landscape, the company’s strategic decisions in the coming months will be vital for its recovery and future positioning in the rapidly evolving chip industry.
