Samsung Faces Challenges in AI Chip Race as Profits Decline
10 Sources
[1]
Samsung logs weak chip profit in 2024, vows to double HBM sales
ANN/THE KOREA HERALD - Samsung Electronics, the world's largest memory chipmaker, reported weaker-than-expected chip earnings in 2024 despite record sales, as it struggled to keep up in the artificial intelligence (AI) chip race amid plunging legacy product prices. The company said it achieved
[2]
Samsung's Chip Division Underwhelms in Costly AI Memory Race
Samsung's smartphones, TVs and other appliances are facing growing comp Samsung Electronics Co.'s pivotal chip division reported a smaller-than-expected profit as the company fights to close the gap on archrival SK Hynix Inc. in the artificial intelligence arena. Samsung is ratcheting up its
[3]
Samsung predicts profit hit from weak semiconductor sales as US curbs bite
Samsung Electronics has reported weak demand for its memory chips is expected to limit earnings growth in the current quarter, with its problems compounded by US restrictions on supplying advanced semiconductors used in artificial intelligence hardware. The South Korean company said on Friday that
[4]
Samsung earnings sink amid slow transition to AI chips
Samsung's flag waves at Samsung Electronics' office in Seocho District, Seoul, Friday, when the company announced its operating profit for the fourth quarter of 2024 plunged 29.2 percent from three months earlier. Newsis Operating profit from memory remains at W2.9 tril.By Nam Hyun-woo Samsung
[5]
Samsung operating profit hit by R&D spending, fight to meet chip demand
The operating profit of South Korean tech giant Samsung Electronics sank almost a third in the fourth quarter owing to spending on research, the company said Friday, as analysts said it was struggling to meet demand for chips used in AI servers. But Samsung, the world's largest memory chip maker,
[6]
Samsung operating profit hit by R&D spending, fight to meet chip demand
The operating profit of South Korean tech giant Samsung Electronics sank almost a third in the fourth quarter owing to spending on research, the company said Friday, as analysts said it was struggling to meet demand for chips used in AI servers. The news comes as industry leaders try to assess the
[7]
Samsung Expects Limited Earnings Growth Amid Chip Woes -- Update
Samsung Electronics forecast limited earnings growth in the current quarter after better-than-expected net profit for the fourth quarter, as profitability at its core semiconductor business continued to weaken. "Overall earnings improvement is expected to be limited in the first quarter as the
[8]
Samsung's Chip Profit Misses on Costly AI Memory Catchup Race
Samsung Electronics Co.'s pivotal chip division reported a smaller-than-expected profit as the world's largest memory chipmaker fights to narrow the lead arch-rival SK Hynix Inc. has in the artificial intelligence arena. The Suwon-based company's semiconductor unit reported operating profit of 2.9
[9]
Samsung warns of slow AI chip sales as US restrictions mount
STORY: Samsung warned of slow AI chip sales over the first quarter of the year. In an earnings call Friday, the South Korean tech giant said that's due to recent U.S. restrictions that aim to tighten the flow of advanced chips to China. Chinese customers make up 20% of Samsung's sales of HBM - or
[10]
Samsung doubles down on AI with $37B but investors see red
Samsung Electronics reported a significant decline in its operating profit for the fourth quarter, following increased R&D spending and weakness in its semiconductor business. The South Korean company posted fourth-quarter revenue of 75.8 trillion Korean won ($52.2 billion), exceeding its own
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Samsung Electronics reports weak chip earnings in 2024 despite record sales, struggling to keep up in the AI chip market. The company vows to double its high-bandwidth memory (HBM) sales in 2025 amid increasing competition and US export restrictions.
Samsung's Chip Division Struggles Amid AI Boom
Samsung Electronics, the world's largest memory chipmaker, has reported weaker-than-expected chip earnings in 2024, despite achieving record semiconductor sales of KRW111.1 trillion (USD76.4 billion)
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. The company's operating profit for its semiconductor division stood at KRW15.1 trillion, falling short of market expectations and trailing behind its smaller rival SK Hynix1
.Challenges in the AI Chip Market
Samsung's struggles are primarily attributed to its difficulty in keeping up with the artificial intelligence (AI) chip race. The company has been slow to transition to high-bandwidth memory (HBM) chips specialized for AI processors, which has allowed competitors like SK Hynix to gain a significant advantage
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.Samsung has faced setbacks in supplying HBM chips to major clients, particularly Nvidia, the world's top GPU maker
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. The company only recently passed Nvidia's qualification test for less-advanced eight-layer HBM3E chips in December 20244
.Plans for Recovery and Growth
Despite these challenges, Samsung is taking steps to improve its position in the AI chip market:
- The company aims to double its total HBM bit supply in 2025 compared to the previous year
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. - Samsung plans to start mass production of the next-generation HBM4 using a leading-edge 1c-nanometer process node in the second half of 2025
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. - The company is shifting its business portfolio to focus on high-value-added products and optimizing production lines for legacy nodes
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.
Impact of US Export Restrictions
Samsung expects a temporary constraint on HBM sales in the first quarter of 2025, partly due to US export restrictions on AI chips
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. These restrictions, along with customers opting to wait for enhanced HBM3E products, may result in a temporary gap in HBM demand2
.Related Stories
Financial Performance and Market Reaction
Samsung's overall financial performance for 2024 showed mixed results:
- Total sales: KRW300.9 trillion (second-highest annual revenue)
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- Operating profit: KRW32.7 trillion
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- Net income: KRW7.58 trillion (higher than expected)
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The company's stock price fell 2.4% following the earnings announcement, reflecting investor concerns about its position in the AI chip market
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.Industry-wide Implications
The AI chip market is facing potential disruption from innovations like DeepSeek's low-cost AI model, which has raised questions about the economics of large-scale AI infrastructure investments
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. This development could potentially slow down or stretch the hundreds of billions of dollars in AI infrastructure investments over the coming years5
.As Samsung works to overcome its current challenges, the company remains confident in its ability to recover and enter a new phase of growth
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. However, it faces increasing competition from rivals like SK Hynix and emerging Chinese competitors in the memory chip market3
.References
Summarized by
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