Samsung Electronics (005930.KS) has issued a rare apology, revealing that its anticipated third-quarter profits will fall below market expectations due to challenges in the competitive landscape of high-end chip production for the booming AI market.
The tech giant, which has dominated the memory chip sector for three decades, is currently struggling to keep pace with rivals in supplying advanced chips to industry leader Nvidia. This setback highlights the significant challenges facing Samsung as it navigates increasing competition in both conventional and advanced semiconductor markets.
The company disclosed that delays in its AI chip business with an unnamed major customer have negatively impacted earnings, while Chinese competitors have ramped up supplies of conventional chips, further exacerbating the decline in its semiconductor profits.
Samsung estimated an operating profit of 9.1 trillion won ($6.78 billion) for the quarter ending September 30, falling short of the LSEG SmartEstimate of 10.3 trillion won. This figure also marks a sharp decline from the 10.44 trillion won recorded in the previous quarter and a stark contrast to the 2.43 trillion won profit reported during the same period last year.
“The earnings are a shock compared to what many analysts expected initially,” noted Lee Min-hee, an analyst at BNK Investment & Securities. He expressed skepticism about any immediate improvement in Samsung’s earnings, citing the company’s lag behind SK Hynix in sales of high-bandwidth memory (HBM) chips to Nvidia and its high exposure to the Chinese market as significant challenges.
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