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Samsung Electronics apologises for disappointing profit as it struggles in AI chips 

Samsung struggles with AI chips Samsung struggles with AI chips
Samsung struggles with AI chips
Image Credits: REUTERS/Steve Marcus/File Photo

Samsung Electronics warned its third-quarter profit would come in below market expectations and apologised for the disappointing performance with the tech giant lagging its rivals in supplying high-end chips to Nvidia in the booming AI market. 

The rare apology illustrates the challenges facing the company, which has been the world’s biggest memory chipmaker for three decades but is battling growing competition in both conventional and advanced chips. 

Samsung said its AI chip business with an unidentified major customer was hit by a delay, while Chinese chip rivals increased supplies of conventional chips, contributing to the decline in its semiconductor earnings. 

The world’s largest memory chip, smartphone and TV maker estimated an operating profit of 9.1 trillion won ($6.78 billion) for the three months ended Sept. 30, versus a 10.3 trillion won LSEG SmartEstimate. 

That would compare with 2.43 trillion won in the same period a year earlier and 10.44 trillion won in the preceding quarter. 

“The earnings are a shock compared to what many analysts expected initially,” said Lee Min-hee, an analyst at BNK Investment & Securities. 

“I don’t see its earnings improving in the current quarter,” he said, saying it lags SK Hynix in increasing sales of high bandwidth memory (HBM) chips to Nvidia and its high exposure to the Chinese market hurts. 

Samsung’s late response to the AI chip market increases its reliance on traditional, lower-margin chips, making it more vulnerable to competition from China and slowing demand for smartphones and PCs, analysts say. 

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 SK Hynix (000660.KS), opens new tab in supplying high-bandwidth memory (HBM) chips to AI leader Nvidia (NVDA.O) 

Content Courtesy – Tech Crunch