Samsung's Q4 Profit Miss Highlights Struggles in AI Chip Market

Samsung's profit estimates disappoint as memory chip struggles persist

Samsung Electronics estimated operating profit more than doubled in the fourth quarter from the previous year, but its numbers on Wednesday fell far short of analyst expectations, fuelling concerns about the South Korean company's continuing technological weakness. Operating profit at the world's largest maker of memory chips, smartphones and televisions was estimated at Won6.5tn ($4.5bn) in preliminary figures for its October-December quarter, missing the Won7.7tn forecast by analysts according to LSEG SmartEstimate. Samsung said earnings in its core semiconductor division were hit by cooling demand for computers and handsets and the greater investments needed to expand capacity for advanced chip manufacturing. Analysts said the business was affected by an oversupply of conventional memory chips, increasing losses at its contract manufacturing arm and delays in supplying its latest HBM3E chips for Nvidia's artificial intelligence products. Last month, US rival Micron Technology also forecast quarterly revenue and profit below analyst estimates due to lower chip prices. Samsung's weaker than expected earnings underline investor concern that the company is falling further behind crosstown rival SK Hynix in the high-bandwidth memory chips used in AI hardware. Jensen Huang, Nvidia's chief executive, told reporters in Las Vegas on Tuesday that Samsung had to "engineer a new design" to supply HBM chips to his company, although he added that "they can do it and they are working very fast". Despite disappointing earnings, Samsung shares jumped 2.9 per cent on Wednesday on expectations of chip demand recovery. The shares slumped more than 30 per cent last year, prompting the company to issue a rare apology in October for its poor performance. Gaining ground in the advanced HBM market is crucial for Samsung's share price recovery, analysts said. "It is important for the company to regain technological edge for the sustained stock price recovery by showing achievements in the HBM business and boosting its operating ratio at the foundry [contract manufacturing] business," analysts at Shinhan Securities said in a report. Analysts expect SK Hynix to report record quarterly earnings this month on strong demand for its HBM chips. Microsoft last week said it planned to spend $80bn on developing AI products and data centres this year. On top of falling chip prices, intensifying competition is also hurting Samsung's mobile business. The company is expected to launch new flagship phones this month to regain market share amid tougher competition from Apple and Chinese rivals. The performance of the upcoming Galaxy S25 model will be pivotal for Samsung to take on the iPhone and Android-powered devices boasting AI features. Samsung, which pioneered foldable devices, is struggling to stave off competition from Chinese contenders offering slick alternatives. The company is due to announce detailed results later this month.

Samsung Q4 earnings expected to be hit by Nvidia AI chip supply delay

SEOUL (Reuters) - Samsung Electronics, the world's top memory chip maker, is expected to forecast on Wednesday its profit growth continued to slow in the fourth quarter as it struggled to keep up with Nvidia's strong demand for AI chips. Samsung, also the world's largest smartphone and TV maker, is expected to estimate its operating profit rose to 8.2 trillion won ($5.6 billion) in the quarter ended December, up from a low base of 2.8 trillion won a year earlier but down from 9.18 trillion won in the preceding quarter. A slew of analysts have cut their earnings estimates in recent weeks, with some expecting operating profit to fall below 8 trillion won. In October, the South Korean company made a rare apology for its disappointing third-quarter performance and said it was making progress in supplying AI chips to Nvidia. But it has not provided any update since, and delays to providing Nvidia with high-end chips have continued to weigh on its earnings, analysts said. In November, Samsung replaced some of its top executives in the chip division, while naming its chip division chief co-CEO and bestowing him direct control of its struggling memory chip business. Shares of Samsung, South Korea's most valuable stock, slumped 32% last year, lagging the wider market's 10% loss. In contrast, Samsung's cross-town rival, SK Hynix, a major supplier of advanced AI memory chips to Nvidia, is expected to post record earnings for the fourth quarter, analysts said. PRICES UNDER PRESSURE Lacklustre demand for traditional chips used in mobile phones and PCs and rising output from Chinese rivals has put pressure on chip prices, analysts said. U.S. chipmaker Micron Technology last month forecast quarterly revenue and profit below Wall Street estimates, sending shares lower as weak demand for consumer-centric products impacts the Samsung rival's business. Prices of DDR4 DRAM chips used in personal computers fell as much as 13% in the fourth quarter and are expected to decline another 15% in the current quarter, according to estimates from researcher TrendForce. This offset the positive impact of the weaker local currency that boosts repatriated earnings from overseas. The South Korean won dropped to its weakest level in 15 years in December after President Yoon Suk Yeol's martial law decree triggered political turmoil and U.S. President-elect Donald Trump advocates higher tariffs on imports. Samsung's business of making logic chips designed by customers like Qualcomm is expected to continue to make losses, eroding its chip earnings, analysts said. Samsung will announce estimates on fourth-quarter revenue and operating profit on Wednesday, with a plan to release detailed results including a breakdown of earnings for each of its businesses in late January. (Reporting by Hyunjoo Jin; Editing by Anne Marie Roantree and Jamie Freed)

Samsung Q4 Earnings Expected to Be Hit by Nvidia AI Chip Supply Delay

Samsung will announce estimates on fourth-quarter revenue on Wednesday Samsung Electronics, the world's top memory chip maker, is expected to forecast on Wednesday its profit growth continued to slow in the fourth quarter as it struggled to keep up with Nvidia's strong demand for AI chips. Samsung, also the world's largest smartphone and TV maker, is expected to estimate its operating profit rose to 8.2 trillion won ($5.6 billion roughly Rs. 47,984 crore) in the quarter ended December, up from a low base of WON 2.8 trillion (roughly Rs. 16,547 crore) a year earlier but down from WON 9.18 trillion (roughly Rs. 54,238 crore) in the preceding quarter. A slew of analysts have cut their earnings estimates in recent weeks, with some expecting operating profit to fall below WON 8 trillion (roughly Rs. 47,267 crore) In October, the South Korean company made a rare apology for its disappointing third-quarter performance and said it was making progress in supplying AI chips to Nvidia. But it has not provided any update since, and delays to providing Nvidia with high-end chips have continued to weigh on its earnings, analysts said. In November, Samsung replaced some of its top executives in the chip division, while naming its chip division chief co-CEO and bestowing him direct control of its struggling memory chip business. Shares of Samsung, South Korea's most valuable stock, slumped 32 percent last year, lagging the wider market's 10 percent loss. In contrast, Samsung's cross-town rival, SK Hynix, a major supplier of advanced AI memory chips to Nvidia, is expected to post record earnings for the fourth quarter, analysts said. Prices Under Pressure Lacklustre demand for traditional chips used in mobile phones and PCs and rising output from Chinese rivals has put pressure on chip prices, analysts said. US chipmaker Micron Technology last month forecast quarterly revenue and profit below Wall Street estimates, sending shares lower as weak demand for consumer-centric products impacts the Samsung rival's business. Prices of DDR4 DRAM chips used in personal computers fell as much as 13 percent in the fourth quarter and are expected to decline another 15% in the current quarter, according to estimates from researcher TrendForce. This offset the positive impact of the weaker local currency that boosts repatriated earnings from overseas. The South Korean won dropped to its weakest level in 15 years in December after President Yoon Suk Yeol's martial law decree triggered political turmoil and US President-elect Donald Trump advocates higher tariffs on imports. Samsung's business of making logic chips designed by customers like Qualcomm is expected to continue to make losses, eroding its chip earnings, analysts said. Samsung will announce estimates on fourth-quarter revenue and operating profit on Wednesday, with a plan to release detailed results including a breakdown of earnings for each of its businesses in late January. © Thomson Reuters 2025

Samsung forecasts Q4 profit miss amid struggle to supply Nvidia with AI chips - SiliconANGLE

Samsung forecasts Q4 profit miss amid struggle to supply Nvidia with AI chips Samsung Electronics said today that it's likely to miss analyst's expectations on fourth quarter profit by a wide margin. Analysts blamed the miss on the poor performance of its high-end memory chips for artificial intelligence accelerators. In its preliminary earnings forecast, Samsung said its fiscal 2024 fourth-quarter operating is likely to double from a year earlier, yet still fall short of expectations. Analysts said this is because the company is struggling to compete with its rival SK Hynix Inc. in terms of being able to supply high-end memory chips to customers like Nvidia Corp. The company's profit was dented by rising costs related to research and development and the ramping up of its manufacturing capacity for more advanced memory chips. In addition, it has been hit by lower demand for more conventional memory chips used in personal computers and smartphones. Samsung, which is the world's largest manufacturer of memory chips, smartphones and televisions, said it anticipates a fourth-quarter operating profit of 6.5 trillion won ($4.47 billion), far below the 7.7 trillion won forecast. While that number represents a 131% jump from the year-ago period, it's down 29% on a sequential basis, compared to the third quarter of fiscal 2024. Three months ago, the company made a rare apology to investors for its third-quarter performance, though it has so far not done so again, despite the latest results appearing to be even worse. Samsung in its third-quarter earnings report that it was making progress in its efforts to supply high-bandwidth memory chips to Nvidia, but it has not provided any updates since then, and the ongoing delay appears to have put a big dent in its earnings, analysts told Reuters. On Tuesday, Nvidia Chief Executive Jensen Huang told the Korea JoongAng Daily that Samsung must "engineer a new design" if it wants to sell HBM chips to his company. He added that "they can do it, and they are working very fast." However, Hyundai Motor Securities analyst Greg Noh told Reuters that it will likely be "some time" before Samsung is able to do this Samsung's stock fell 1% in early trading in South Korea on Wednesday, but rebounded to show a 1% gain later. Lee Min-hee, an analyst at BNK Investment & Securities, said the quick rebound in Samsung's stock price likely stems from the fact that investors already knew the company's fourth quarter performance would disappoint. "There are concerns about Samsung's major businesses continuing to lose competitiveness," he added. "But chip demand may have bottomed already, and smartphone demand in China may soon improve." Samsung's shares fell 32% in 2024, lagging behind the average 10% decline in semiconductor stocks. One of Samsung's main rivals in the memory chip business, Micron Technology Inc., last month offered a quarterly revenue and profit forecast that came in well below analyst's estimates, sending its stock lower. On the other hand, SK Hynix, which is the world's second-largest memory chip manufacturer, appears to be taking full advantage of its rivals' troubles, with analysts forecasting that it will post a record profit when it reports its fourth-quarter earnings later this month. Samsung hasn't been helped by the sluggish demand for legacy memory chips, especially in the smartphone sector, which has led to lower utilization rates at its factories. This represents Samsung's core business, and analysts believe it will continue to rack up losses while it struggles to increase production yields to compensate. The company will release its fourth-quarter results, including a detailed breakdown of its earnings for each of its major businesses, at the end of the month.

Samsung Q4 profit misses expectations amid Nvidia chip supply delays By Investing.com

Investing.com-- Samsung (LON:0593xq) Electronics (KS:005930) flagged a weaker-than-expected operating profit for the fourth quarter on Wednesday, as the South Korean tech giant largely lagged its rivals in supplying memory chips to the artificial intelligence industry. Samsung's operating profit for the three months to December 31 was likely 6.50 trillion won ($4.5 billion), less than Bloomberg estimates of 8.96 trillion won, the company said in a preliminary earnings statement. Profit still rose from a lower base of 2.8 trillion won seen in the last quarter of 2023. Samsung- which is the world's biggest memory chip maker by capacity- is grappling with a string of delays in developing high-bandwith memory chips to supply to the AI industry. The company has offered scant details on its plans to supply AI major NVIDIA Corporation (NASDAQ:NVDA) with HBM chips, largely lagging rivals such as SK Hynix Inc (KS:000660) and Micron Technology Inc (NASDAQ:MU) in capitalizing on the AI boom. Samsung has also lagged SK Hynix in mass producing advanced HBM chips, which will be used in Nvidia's next generation of AI silicon. Recent reports suggested that Samsung was struggling to meet Nvidia's production standards for HBM chips, which are a key component of the latter's advanced AI chips. Samsung's third-quarter earnings had also disappointed markets, which saw the company issue a rare apology and also enact a major management reshuffle at its chip unit. The world's biggest memory chip maker was already struggling with slowing demand for consumer electronics, which had weighed on its overall sales in the past two years.

Samsung Profit Disappoints After AI Chip Missteps Hurt Business

Samsung Electronics Co.'s quarterly profit missed estimates, reflecting a costly effort to claw back market share in the pivotal AI chip and smartphone arenas. Korea's largest company reported preliminary operating profit of 6.5 trillion won ($4.5 billion) in the December quarter, versus analysts' average projection for 8.96 trillion won. Revenue came to 75 trillion won, also missing estimates. Samsung will provide a full financial statement with net income and divisional breakdowns later this month.