Samsung's Semiconductor Profits Plummet Amid Struggles in AI Chip Market

Samsung Witnesses a Whopping 40% QoQ Decline In Semiconductor Profits, As They Struggle To Capitalize On AI Boom

Samsung Foundry has witnessed a massive blow, as the division reports a whopping 40% QoQ decline in profitability, creating massive troubles for the Korean giant. Samsung's financial troubles aren't finishing just yet, as after reporting a massive strike to its HBM business, the Korean giant is now facing dwindling economic conditions with its semiconductor division, as the firm's Q3 2024 earnings report reveals that Samsung's DS department has reported quarterly operating profits at KRW 3.86 trillion, coming in less than the expected KRW 4.2 trillion. The main culprit in low profitability rates is associated with the slack in the HBM business, following the announcement that Samsung has unable to secure NVIDIA and other AI tech giants as customers for their HBM portfolio. Interestingly, Samsung's overall YoY revenue growth is still at 17.35%, reaching up to KRW 79.1 trillion, but with the semiconductor business lagging, the earnings reports haven't created much of a positive impact on the markets. For those unaware, Samsung's HBM business hasn't managed to held up against competitors, notably SK hynix, as despite going through a thorough "HBM sampling" process with NVIDIA, the Korean giant was unable to secure Team Green as a customer, after which, the business has been witnessing an overall downfall. However, with Samsung's HBM ambitions, the Korean giant has revealed profound achievements, that might prove to be a turn around for the company. Samsung has revealed that HBM3E is expected to be in mass-production by this quarter, and it will account for more than 50% of the total HBM sales in Q4 alone. Apart from this, Samsung says that the company is expected to supply to NVIDIA by Q4, but it has admitted to the delay, citing qualification inconsistencies. And, HBM4 is slated for H2-2025, so things are looking quite positive for now. Samsung has shown massive optimism with the foundry business, moving into the future, since the firm claims that they have seen breakthroughs with its "cutting-edge" nodes, specifically with the 2nm GAA, as Samsung has now pushed out "SDK kits" for potential customers to integrate the technology into their product designs, and is expected to shift towards mass-production by FY 2025. Samsung's 2nm is still being faced with yield rate complications, which has hindered the adoption of the process, but by the looks of it, the Korean giant still has hope with sub-2nm technologies. The Korean giant isn't in its best of position for now, but the Q3 2024 earnings clearly show that Samsung has huge ambitions for the future, and given that the firm executes its plan accordingly, it might be in for an economic upturn moving into Q4, and FY 2025.

Samsung falls short of expectations as chipmaker fails to reap AI benefits

Samsung Electronics reported an operating profit of Won3.9tn ($2.8bn) from its chip division in the third quarter, falling far short of analyst estimates and behind its South Korean rival SK Hynix, as the world's biggest memory-chip maker failed to take full advantage of the artificial intelligence boom. Operating profit in the July-to-September quarter was much lower than the Won6.7tn estimate of analysts polled by Bloomberg and the Won6.45tn profit reported in the preceding quarter. Chip earnings were also much smaller than those of domestic rival SK Hynix, which reported a Won7tn operating profit last week, highlighting the widening gap in their competitiveness in advanced memory chips. Samsung this month issued a rare public apology for its weak performance as it has struggled to catch up with SK Hynix in high bandwidth memory chips used in AI hardware. Samsung has not managed to pass industry leader Nvidia's qualification tests for advanced HBM chips, but the company said on Thursday it had made "meaningful progress" in its efforts to win Nvidia's approval and expected HBM chip sales to increase in the fourth quarter. Samsung's share price has fallen more than 30 per cent from its July peak on heavy foreign selling, but the shares gained 2 per cent on Thursday morning amid hopes Samsung could regain lost ground in HBM chips. The company expects limited earnings growth in the fourth quarter due to falling demand in mobile and computer Dram chips and a rising supply of legacy chips in China. Analysts have expressed scepticism about Samsung's business prospects in HBM and expect a major shake-up among its chip executives next month. "Samsung remains optimistic about the HBM outlook, but it won't be easy to pass the qualification test and increase HBM yields," said an analyst at a foreign brokerage, referring to Samsung being able to produce more of the chips without flaws. "It is too early to talk about Samsung regaining HBM competitiveness," the analyst added. "Some of its key memory executives will likely be replaced for the weak performance."

Samsung's Q3 profit from chips remains at $2.8 bil., as non-memory biz declines

Samsung Electronics' office in Seocho District, Seoul / Yonhap Chipmaker drops hints at possible HBM supply to NvidiaBy Nam Hyun-woo Samsung Electronics' operating profit from its semiconductor business in the third quarter of this year stood at 3.86 trillion won ($2.8 billion), falling short of the 4 trillion won expected by analysts. The company attributed its weakened profitability to one-off costs in its chip-making Device Solutions (DS) division. However, the market believes that the division's non-memory segment played a larger role in the incurred losses, which amounted to trillions of won and negatively affected overall profitability. Despite the disappointing numbers, the company provided a rosy outlook on its AI-specific high-bandwidth memory (HBM) chip businesses, implying that the company's advanced HBM3e chips are now at the final stage of passing Nvidia's quality tests. Samsung Electronics' operating profit During an earnings call on Thursday, Samsung Electronics reported sales of 79.1 trillion won and an operating profit of 9.18 trillion won during the July-to-September period, aligning closely with its guidance from earlier this month. Revenue grew 17.35 percent year-on-year to set a new high, but the operating profit fell below the 10 trillion won mark just three months after the company posted 10.44 trillion won for the second quarter. The weaker-than-expected performance was due largely to sluggish growth in the DS division, which reported 29.27 trillion won in revenue and an operating profit of 3.86 trillion won. While these figures marked improvements from last year, when the global chip industry faced a downturn, they still fell short of analysts' expectations during the earnings guidance, which had projected an operating profit of at least 4 trillion won for the division. Read MoreSamsung's crisis management ability comes under growing scrutinySamsung Electronics' Q3 earnings fall below market expectationsSK hynix leads AI memory market with record Q3 earnings Samsung explained that profits of its memory chip business declined due to "one-off factors such as reduced inventory valuation gains, provisions for incentives and foreign exchange rates." The company did not provide detailed numbers for the costs, but analysts assume that this amounts to approximately 1 trillion won. Adding another blow was its non-memory businesses including chip designing and foundry. The company briefly noted that the performances of those businesses have declined due to one-off costs, but the market assumes that they have incurred a loss between 1 trillion won and 2 trillion won. This at the same time means that the company's memory chip business remained intact during the third quarter. During the earnings call, the company explained that one-off costs incurred during the period were greater than the discrepancy between the 10.4 trillion won market consensus for the company's total operating profit and the actual profit of 9.18 trillion won. Given the one-off costs and the losses from non-memory businesses, the profit from the memory business alone is estimated to have almost reached 7 trillion won. The company noted that its memory business showed a steady growth in the sales of high-value products including HBM. "Compared to the previous quarter, the revenue from HBM grew by 70 percent, and we are now mass-producing and selling 8-layer and 12-layer HBM3e chips," said Kim Jae-joon, executive vice president of Samsung's DS division. HBM3e is the fifth-generation HBM, and 12-layer HBM3e chips are expected to be the mainstream for AI processors that will hit the market next year. Samsung Electronics' 12-layer HBM3e / Courtesy of Samsung Electronics Rebound in HBM During the call, Kim noted that the company achieved "significant progress by completing a key stage in quality testing with a major client," and it expects "an expansion in sales in the fourth quarter of this year." So far, Samsung has been struggling to expand its HBM3e supply to Nvidia, with reports alleging setbacks in passing quality tests for Nvidia's AI processors. This raised market concerns about Samsung's HBM competitiveness, as the testing timeline extended beyond the company's original plan. "HBM3e accounted for low 10 percent level in the company's overall HBM sales, and this will likely climb up to 50 percent in the fourth quarter," Kim said. The company also noted that it will be able to develop and mass-produce the sixth-generation HBM4 by the second half of next year, while dropping hints at cooperating with outside foundries to supply custom HBM chips. Regarding its foundry business, Samsung noted that it will concentrate its investments on HBM and other advanced memory chips, and scale down investments toward its foundry business. Meanwhile, the company's Device Experience (DX) division, which covers mobile phones and consumer electronics, posted 44.99 trillion won in sales and 3.37 trillion won in operating profit in the third quarter. Stable sales of flagship products including the Galaxy S24 smartphone contributed to the solid numbers, Samsung said.

Samsung Q3 operating profits soar to $6.6 bn, miss forecast

Seoul (AFP) - South Korea's Samsung Electronics said Thursday that its operating profits soared 277 percent on-year to $6.6 billion but missed expectations as it struggled to leverage demand for chips used in artificial intelligence servers. The world's largest memory chip maker posted an operating profit of 9.18 trillion won ($6.6 billion) "largely due to one-off costs". It also warned in a statement that "the strength of the Korean won against the US dollar resulted in a negative impact on company-wide operating profit". Although operating profit nearly tripled compared with a year ago, it fell short of market expectations and was down 12 percent compared with the previous quarter. Revenue rose 17.35 percent to 79.1 trillion won ($57.2 billion), its highest quarterly record, Samsung said. The firm is the flagship subsidiary of South Korean giant Samsung Group, by far the biggest of the family-controlled conglomerates that dominate business in Asia's fourth-largest economy. Semiconductors are the lifeblood of the global economy, used in everything from kitchen appliances and mobile phones to cars and weapons. The company's semiconductor division reported 3.86 trillion won in operating profit, a 40 percent decrease from last quarter. Samsung said its performance had decreased due to "a reduced reversal of inventory valuation loss compared to the previous quarter, one-off expenses such as the provision of incentives, and currency effects due to a weak dollar". Rare apology Samsung has been lagging behind South Korean giant SK hynix when it comes to high-bandwidth memory (HBM) chips used in AI chipsets, which experts have blamed for the lacklustre results. This month, Samsung management issued a rare, separate apology, acknowledging the company was facing a "crisis". "Our management will take the lead in overcoming the crisis... We will make the serious situation we are currently facing an opportunity for a resurgence." Samsung shares have dropped by 33 percent since their peak in July and the company has lost over $120 billion of market value during that time. The market capitalization gap between Samsung Electronics and SK hynix reached its narrowest level in 13 years last week. Shares in Samsung rose 0.3 percent in Seoul on Thursday in early trading. The rare apology came about a week after the tech giant said it intended to reduce staff in some of its Asia operations, describing the move as "routine workforce adjustments". Bloomberg reported the layoffs could affect about 10 percent of the workforce in those markets. Robust AI demand For the next quarter, Samsung expects current demand for the memory business to continue and aims to "strengthen its business fundamentals" by normalising inventory levels. "In the fourth quarter, while memory demand for mobile and PC may encounter softness, growth in AI will keep demand at robust levels," it added. Experts said falling prices in the memory sector could affect Samsung. However, Samsung is expected to increase shipments of its most advanced chips next quarter, according to Avril Wu, senior research vice president at TrendForce. "The company's fourth-quarter profits will be sustainable," she said. But if Samsung does not get the certification of its high-capacity HBM3E chips in time, "it will pressure Samsung's gross profit performance," she added.

Samsung's semiconductor division, lagging behind rivals in AI chips, reports a 40% drop in profit from the previous quarter

South Korea's Samsung Electronics said Thursday that its operating profits soared 277% on-year to $6.6 billion, but missed expectations as it struggled to leverage demand for chips used in artificial intelligence servers. The world's largest memory chip maker posted an operating profit of 9.18 trillion won ($6.6 billion) "largely due to one-off costs". It also warned in a statement that "the strength of the Korean won against the U.S. dollar resulted in a negative impact on company-wide operating profit." Although operating profit nearly tripled compared to a year ago, it fell short of market expectations and was down 12% compared to the previous quarter. Revenue rose 17.35% to 79.1 trillion won ($57.2 billion), its highest quarterly record, Samsung said. The firm is the flagship subsidiary of South Korean giant Samsung Group, by far the biggest of the family-controlled conglomerates that dominate business in Asia's fourth-largest economy. Semiconductors are the lifeblood of the global economy, used in everything from kitchen appliances and mobile phones to cars and weapons. The company's semiconductor division reported 3.86 trillion won in operating profit, a 40% sharp decrease compared to last quarter. Samsung said its performance had decreased due to "a reduced reversal of inventory valuation loss compared to the previous quarter, one-off expenses such as the provision of incentives, and currency effects due to a weak dollar". Samsung has been lagging behind South Korean giant SK hynix when it comes to high bandwidth memory (HBM) chips used in AI chipsets, which experts have blamed for the lacklustre results. This month, Samsung management issued a rare, separate apology, acknowledging the company was facing a "crisis". "Due to results that fell short of market expectations, concerns have arisen about our fundamental technological competitiveness and the future of the company," said the statement, which was signed by Jun Young-hyun, the vice chairman of the company's device solutions division. "Our management will take the lead in overcoming the crisis...We will make the serious situation we are currently facing an opportunity for a resurgence." Samsung shares have dropped sharply 33% since its peak in July and the company has lost over $120 billion of market value during that time. Shares in Samsung rose 0.3% in Seoul on Thursday in early trading. The rare apology came about a week after the tech giant said it intended to reduce staff in some of its operations in Asia, describing the move as "routine workforce adjustments". Bloomberg reported that the layoffs could affect about 10% of the workforce in those markets.

Samsung's Chip Business Sags Even as Profit Beats Expectations -- Update

Samsung Electronics reported sharply lower earnings in its flagship semiconductor business despite better-than-expected net profit overall for the third quarter. The mixed results come as the South Korean technology giant faces the twin challenge of catching up with industry rivals in supplying more advanced artificial-intelligence chips and mitigating the impact of lower-end chips from China flooding the markets. Net profit for the July-September period climbed 73% from a year earlier to 10.101 trillion won, equivalent to $7.32 billion, beating a FactSet-compiled consensus estimate of 8.601 trillion won. Profit rose 2.6% from the previous quarter, the company said Thursday. Revenue for the quarter increased 17% to 79.099 trillion won and operating profit rose nearly fourfold to 9.183 trillion won, largely in line with the company's preliminary estimates. The company on Thursday said its flagship chip-making division generated an operating profit of 3.860 trillion won, down 40% from the prior quarter. That compared with smaller rival SK Hynix's 7.030 trillion won profit for the period. Samsung earlier this month issued a rare apology to investors while guiding for downbeat quarterly earnings and acknowledging delays in supplying the latest version of its high-bandwidth-memory products to AI-chip maker Nvidia and other major customers. The company's stock has dropped about 25% this year, while shares in South Korea's SK Hynix and Micron Technology of the U.S.--rival makers of HBM--have gained more than 30% and 20%, respectively. Taiwan Semiconductor Manufacturing's shares have jumped more than 70% this year. The AI boom has driven strong demand for high-performance and powerful computing chips to train and operate generative AI models such as the one behind chatbot ChatGPT. Samsung, the longtime memory-market leader, has underperformed SK Hynix, Micron and TSMC in the AI-fueled chip manufacturing sector. While its rivals are already supplying Nvidia with advanced HBM3E products, Samsung has struggled to get its latest chip certified for use in Nvidia's graphics-processing units crucial for AI computing. Challenges for South Korea's biggest company also come from a huge output increase from Chinese chip makers. Analysts say China's oversupply could cause lower-end chip prices to keep falling and derail the recovery of the memory-chip market. The aggressive output expansion, which largely focuses on legacy chips, or older-generation semiconductors, used in smartphones and home appliances, could force chip manufacturers to cut production or dump excess goods on global markets. Samsung said Thursday that it expects some mobile-chip corporate customers to adjust their inventories further. The company said its chip business will focus on higher-end products such as advanced HBM products, double-data-rate 5 chips and solid-state drives for data servers. It plans to invest 56.7 trillion won in facilities for 2024, 3.6 trillion won more than last year, as it pushes to increase its sales of HBM3E products and develop upgraded HBM4 products by the end of this year. Samsung said bigger-than-expected one-off bonus payments to employees also pressured the latest earnings. The company said potentially weaker sales of finished electronics goods could weigh on growth in the fourth quarter. Its smartphone business was a bright spot amid the overall dim earnings picture for the third quarter. Revenue and operating profit from its mobile-experience division rose 11% and 26%, respectively, from the previous quarter.

Samsung's Q3 2024 profits soar YoY despite chip woes

Samsung has reported its earnings for Q3 2024 that ended September 30, 2024 in which the company posted 79.1 trillion won (USD 57.34 billion approx.) consolidated revenue, up 17.35% YoY, and up 6.79% QoQ, slightly above its own expectations. It made an operating profit of 9.18 trillion won (USD 6.65 billion), up 277.77% YoY, but down 12% QoQ, largely due to one-off costs, including the provision of incentives in the Device Solutions (DS) Division, said Samsung. The MX and Networks businesses posted 30.52 trillion won in consolidated revenue, up 1.73% YoY. The division posted 2.82 trillion won in operating profit, down 14.54% YoY and up 26.45% QoQ. Although global inflation continued to dampen consumer spending and limit market growth for smartphones, MX Business achieved sequential revenue and operating profit growth. This success was driven by new product launches across smartphones, tablets, and wearables, with a strategic focus on flagship models that led to increased sales. Despite higher material costs associated with enhanced product specifications, profitability neared double digits. The smartphone market is predicted to experience sequential growth in the fourth quarter due to seasonal factors. However, the mass market segment will likely face increased competition due to rising demand, especially in emerging markets. MX Business plans to maintain strong sales of its AI smartphones, including foldables and the S24 series, through various holiday season promotions. The goal is to achieve double-digit annual flagship sales growth. Additionally, MX Business will expand sales of tablets and wearables connected to year-end seasonality, particularly new premium products with significantly enhanced performance, to boost sales and profits. In 2025, the macroeconomic environment is expected to stabilize somewhat due to interest rate cuts, resulting in slight growth in the smartphone market. The mass market segment, along with demand for ecosystem products, is projected to grow. The smartwatch and true wireless stereo (TWS) markets are also expected to expand with wider applications of AI capabilities. MX Business will focus on driving sales growth and improving profitability by concentrating on flagship products, such as smartphones, foldables, tablets, and wearables, based on further advancements in Galaxy AI. The semiconductor unit reported operating profit of 3.86 trillion won (USD 2.8 billion approx.), up 2.93% from the previous year, but down 40% from the previous quarter. Demand for advanced nodes increased, driven by rising demand for AI, but mobile and PC demand underperformed. In the next quarter, with Mobile/PC market rebound delayed; weak demand will persist, but advanced demand to grow due to AI, said the company. Samsung will continue to develop 2nm GAA technology and focus on process/infra development to secure mobile/HPC customers next quarter.

Samsung Rises After Signalling Progress With Nvidia on AI Memory

Samsung must try to secure a meaningful market share alongside SK Hynix Samsung Electronics Co. declared progress in supplying its most advanced AI memory chips to Nvidia Corp., offering some reassurance to investors who fear the company's falling further behind SK Hynix Inc. in a red-hot market. Samsung's stock rose as much as 3.6% after an executive told analysts the company has made "meaningful" progress in key stages of the qualification process with a major customer, referring to Nvidia. The Korea company now expects to sell its highest-margin and most advanced HBM3E chips in the fourth quarter, Jaejune Kim, executive vice president of Samsung's memory business, said on an earnings call Thursday. SK Hynix's shares fell as much as 4.6%. The once-dominant memory maker has struggled to get its latest chips certified by Nvidia for use with AI accelerators. That's provided an unusually long window for SK Hynix and Micron Technology Inc. to carve out commanding leads in the lucrative high-bandwidth memory arena. South Korea's largest company has so far missed the lion's share of profits stemming from surging artificial intelligence-related demand. It also remains exposed to weak mobile chip sales, even as it faces rising supply of legacy chips in the China market. Demand for its smartphone chips are expected to stay weak next year, executives said. "The key question is whether Samsung will be able to secure a meaningful market share from Nvidia even if it becomes another vendor after SK Hynix," said Greg Roh, an analyst at Hyundai Motor Securities Co. "We have to wait and see." Profit at Samsung's mainstay semiconductor operations missed market expectations, reflecting the Korean tech leader's struggles to catch up in HBM and turn around its foundry business. Its semiconductor division -- typically the biggest profit contributor -- earned just 3.86 trillion won ($2.8 billion) in operating profit in the September quarter, shy of a 6.66 trillion won estimate. That comes as SK Hynix posted a record operating profit of 7.03 trillion won last week with plans to supply its 12-layer HMB3E in the current quarter. Samsung is now cutting production of its legacy memory in an effort to speed up conversion to cutting-edge manufacturing processes, Kim said. Its memory-related capital expenditures will prioritize high-end products, he said. Chip-related capital expenditures are expected to total 47.9 trillion won this year, and Samsung now expects to mass produce next-generation HBM4 chips in the second half of next year. Samsung, which has lost about a quarter of its value this year, still reported net income of 9.78 trillion won, beating the analysts' average estimate of 9.14 trillion won, as other parts of the company's sprawling business helped offset its chip operations. The earnings emerged three weeks after Jun Young-hyun, head of Samsung's chip business, apologized for disappointing results and acknowledged delays in winning certification for its most advanced lineup of chips. Samsung had predicted in July they would go into mass-production by the third quarter. Samsung must now review its organizational culture and processes, Jun had said -- echoing previous comments about the need for fundamental change at one of Korea's oldest companies. It's begun laying off workers in Southeast Asia, Australia and New Zealand as part of a plan to reduce global headcount by thousands of jobs, Bloomberg News reported. What Bloomberg Intelligence Says Samsung Electronics' 2% sequential sales growth for 3Q, announced today, suggests that 4Q's sales growth could fall behind that of SK Hynix, which achieved 7% sequential sales growth in 3Q. SK Hynix could maintain its lead for a while, although Samsung will try to catch up on high-bandwidth memory (HBM) chips for artificial intelligence servers. - Masahiro Wakasugi and Takumi Okano, analysts Apart from lagging SK Hynix in HBM, Samsung's also shown little progress against Taiwan Semiconductor Manufacturing Co. in the outsourced production of custom-made chips. Full-year foundry capex is expected to decline from last year, the company said, although it has plans to update its mature production lines. Chipmakers are fighting to secure capacity at TSMC, the main chipmaker to both Apple Inc. and Nvidia. The global foundry market is expected to grow by double-digits next year, Samsung said. The company aims to boost revenue by improving yields on its advanced lines, it said. Despite difficulties at its semiconductor unit, Samsung's net income got a boost from the launch of its new smartphones, tablets and wearables, where its profitability rose despite high material costs. Samsung said it expects the overall smartphone market to grow sequentially in the current quarter and boost sales of its top-line products, although it expects growing competition in the mid-range segment to weigh on smartphone shipments and average selling price. But the company sees more competition in the TV market, even as it attempts to reposition TVs as AI hubs in homes. © 2024 Bloomberg LP

Samsung Profit Beats Expectations but Chip Business Sags

Samsung Electronics reported better-than-expected net profit for the third quarter, but its core semiconductor business earnings shrank sharply from the previous quarter. The mixed results come as the South Korean technology giant faces the twin challenge of catching up with industry rivals in supplying more advanced artificial-intelligence chips and mitigating the impact of lower-end chips from China flooding the markets. Net profit for the July-September period was 10.101 trillion won, equivalent to $7.32 billion, up 73% from a year earlier, the company said Thursday. Profit rose 2.6% from the previous quarter. That beat a FactSet-compiled consensus estimate of 8.601 trillion won. Revenue for the quarter increased 17% to 79.099 trillion won and operating profit rose nearly fourfold to 9.183 trillion won, largely in line with the company's preliminary estimates. The company on Thursday said its flagship chip-making division generated an operating profit of 3.860 trillion won, down 40% from the prior quarter. That compared with smaller home-country rival SK Hynix's 7.030 trillion won profit for the period. Samsung earlier this month issued a rare apology to investors while guiding for downbeat quarterly earnings and acknowledging delays in supplying the latest version of its high-bandwidth-memory products to AI-chip maker Nvidia and other major customers. The company's stock has dropped about 25% this year, while shares in rival makers of HBM--SK Hynix of South Korea and Micron Technology of the U.S.--have gained more than 30% and 20%, respectively. Taiwan Semiconductor Manufacturing's shares have jumped more than 70% this year.

Samsung posts weaker profit recovery as it misses out on AI boom

Samsung Electronics reported a higher profit for the third quarter compared to last year, albeit with a slower recovery pace. The company faces challenges in monetizing the AI boom amid competition from TSMC and SK Hynix. Its chip division saw a decrease in profits, and the mobile devices business also experienced a dip in operating profit.Samsung Electronics said its third-quarter profit jumped from a year earlier, but the pace of recovery weakened from the prior quarter as it struggles to cash in on the AI boom that has benefited chip rivals like TSMC and SK Hynix. The world's biggest maker of memory chips, smartphones and TVs said it expected limited earnings growth in the current quarter, as growth in chip division would be offset by weakness in its "set" business. The latter typically refers to smartphones, TVs and home appliances, but it did not elaborate further. Samsung posted on Thursday an operating profit of 9.2 trillion won ($6.66 billion) in the July to September period, compared with 2.4 trillion won a year earlier and 10.4 trillion won the previous quarter. The third-quarter result was slightly above Samsung's preliminary estimate of 9.1 trillion won flagged earlier this month, which was below market expectations at the time. Shares fell 0.2% in early trading on Thursday, with the wider South Korean market down 1.3%. The South Korean company this month made a rare apology for its disappointing earnings, citing "delays" in sales of its advanced chips to an unidentified major customer and rising supply of traditional chips from Chinese rivals. Artificial intelligence is the only bright spot in the sluggish chip market, but Samsung has been struggling to supply high-end semiconductors used in Nvidia's AI chipsets, making the South Korean company more vulnerable to lacklustre demand for traditional chips used in PCs and smartphones. Samsung's chip division swung to an operating profit of 3.9 trillion won in the third quarter from a loss of 3.8 trillion won a year earlier, but that was down from 6.45 trillion won the preceding quarter, as the chip market recovery remained weak. "The demand trends experienced in the previous quarter are expected to continue," the company said, referring to the outlook for the semiconductor market in the fourth quarter. Samsung said its chip earnings were hurt by one-off expenses such as the provision of employee incentives, and currency effects due to a weak dollar. SK Hynix had posted a record third-quarter operating profit of 7 trillion won and TSMC also had a strong result during that period thanks to AI chip sales to industry leader Nvidia . Samsung is struggling to compete against rivals not only in its mainstay memory chip business, but also in its foundry business that designs and produces logic chips for other clients. Analysts say Samsung's logic chip business suffered from widening losses in the third quarter. The company has postponed taking deliveries of ASML's high-end chipmaking equipment for its upcoming factory in Texas as it has yet to win any major customers for the project, sources previously told Reuters. Samsung's mobile devices business also saw its third-quarter operating profit dropping to 2.8 trillion won from 3.3 trillion won a year earlier. ($1 = 1,380.3900 won)

Samsung reports 'major' progress in supply deal for AI chips

SEOUL, South Korea (AP) -- Samsung Electronics on Thursday reported progress on a major supply deal for artificial intelligence-focused chips, aiming to reassure investors following a slowdown in semiconductor profits during the last quarter. The South Korean technology giant said its operating profit for the July-September period increased by more than 277% from a year earlier to 9.18 trillion won ($6.65 billion). But the figure represented a 12% decline from the second quarter, which Samsung attributed largely to one-off costs, such as provision of employee incentives in its computer chip business, and the effects of a weaker U.S. dollar. Samsung's semiconductor division earned 3.86 trillion won ($2.8 billion) in operating profit during the quarter, rebounding from a deficit during 2023 but sharply declining from the 6.45 trillion won ($4.67 billion) it reported in the April-June period. While Samsung saw solid demand for AI and server chips during the past quarter, its mobile chip business weakened as some customers adjusted inventories. The market was also affected by Chinese manufacturers' increased supply of legacy memory products, the company said in a statement. More critically, Samsung lagged behind key competitors such as SK Hynix in HBM3E, the latest generation of high bandwidth memory chips that are used to power AI applications. During a conference call, Samsung Executive Vice President Jaejune Kim said the company recently made a "meaningful advance" in a qualification test process to provide its HBM3E products to an unspecified "major client," a development he said could possibly drive up sales during the fourth quarter. Kim's comments touched off speculation that Samsung was closing in on a supply deal with Nvidia, a major U.S. maker that designs advanced chips powering AI. "In the fourth quarter, while memory demand for mobile and PC may encounter softness, growth in AI will keep demand at robust levels. Against this backdrop, the company will concentrate on driving sales of high-bandwidth memory and high-density products," Samsung said.

Samsung reports 'major' progress in supply deal for AI chips

SEOUL, South Korea (AP) -- Samsung Electronics on Thursday reported progress on a major supply deal for artificial intelligence-focused chips, aiming to reassure investors following a slowdown in semiconductor profits during the last quarter. The South Korean technology giant said its operating profit for the July-September period increased by more than 277% from a year earlier to 9.18 trillion won ($6.65 billion). But the figure represented a 12% decline from the second quarter, which Samsung attributed largely to one-off costs, such as provision of employee incentives in its computer chip business, and the effects of a weaker U.S. dollar. Samsung's semiconductor division earned 3.86 trillion won ($2.8 billion) in operating profit during the quarter, rebounding from a deficit during 2023 but sharply declining from the 6.45 trillion won ($4.67 billion) it reported in the April-June period. While Samsung saw solid demand for AI and server chips during the past quarter, its mobile chip business weakened as some customers adjusted inventories. The market was also affected by Chinese manufacturers' increased supply of legacy memory products, the company said in a statement. More critically, Samsung lagged behind key competitors such as SK Hynix in HBM3E, the latest generation of high bandwidth memory chips that are used to power AI applications. During a conference call, Samsung Executive Vice President Jaejune Kim said the company recently made a "meaningful advance" in a qualification test process to provide its HBM3E products to an unspecified "major client," a development he said could possibly drive up sales during the fourth quarter. Kim's comments touched off speculation that Samsung was closing in on a supply deal with Nvidia, a major U.S. maker that designs advanced chips powering AI. "In the fourth quarter, while memory demand for mobile and PC may encounter softness, growth in AI will keep demand at robust levels. Against this backdrop, the company will concentrate on driving sales of high-bandwidth memory and high-density products," Samsung said.

Samsung reports 'major' progress in supply deal for AI chips

SEOUL, South Korea -- Samsung Electronics on Thursday reported progress on a major supply deal for artificial intelligence-focused chips, aiming to reassure investors following a slowdown in semiconductor profits during the last quarter. The South Korean technology giant said its operating profit for the July-September period increased by more than 277% from a year earlier to 9.18 trillion won ($6.65 billion). But the figure represented a 12% decline from the second quarter, which Samsung attributed largely to one-off costs, such as provision of employee incentives in its computer chip business, and the effects of a weaker U.S. dollar. Samsung's semiconductor division earned 3.86 trillion won ($2.8 billion) in operating profit during the quarter, rebounding from a deficit during 2023 but sharply declining from the 6.45 trillion won ($4.67 billion) it reported in the April-June period. While Samsung saw solid demand for AI and server chips during the past quarter, its mobile chip business weakened as some customers adjusted inventories. The market was also affected by Chinese manufacturers' increased supply of legacy memory products, the company said in a statement. More critically, Samsung lagged behind key competitors such as SK Hynix in HBM3E, the latest generation of high bandwidth memory chips that are used to power AI applications. During a conference call, Samsung Executive Vice President Jaejune Kim said the company recently made a "meaningful advance" in a qualification test process to provide its HBM3E products to an unspecified "major client," a development he said could possibly drive up sales during the fourth quarter. Kim's comments touched off speculation that Samsung was closing in on a supply deal with Nvidia, a major U.S. maker that designs advanced chips powering AI. "In the fourth quarter, while memory demand for mobile and PC may encounter softness, growth in AI will keep demand at robust levels. Against this backdrop, the company will concentrate on driving sales of high-bandwidth memory and high-density products," Samsung said.

Samsung Reports 'Major' Progress in Supply Deal for AI Chips

SEOUL, South Korea (AP) -- Samsung Electronics on Thursday reported progress on a major supply deal for artificial intelligence-focused chips, aiming to reassure investors following a slowdown in semiconductor profits during the last quarter. The South Korean technology giant said its operating profit for the July-September period increased by more than 277% from a year earlier to 9.18 trillion won ($6.65 billion). But the figure represented a 12% decline from the second quarter, which Samsung attributed largely to one-off costs, such as provision of employee incentives in its computer chip business, and the effects of a weaker U.S. dollar. Samsung's semiconductor division earned 3.86 trillion won ($2.8 billion) in operating profit during the quarter, rebounding from a deficit during 2023 but sharply declining from the 6.45 trillion won ($4.67 billion) it reported in the April-June period. While Samsung saw solid demand for AI and server chips during the past quarter, its mobile chip business weakened as some customers adjusted inventories. The market was also affected by Chinese manufacturers' increased supply of legacy memory products, the company said in a statement. More critically, Samsung lagged behind key competitors such as SK Hynix in HBM3E, the latest generation of high bandwidth memory chips that are used to power AI applications. During a conference call, Samsung Executive Vice President Jaejune Kim said the company recently made a "meaningful advance" in a qualification test process to provide its HBM3E products to an unspecified "major client," a development he said could possibly drive up sales during the fourth quarter. Kim's comments touched off speculation that Samsung was closing in on a supply deal with Nvidia, a major U.S. maker that designs advanced chips powering AI. "In the fourth quarter, while memory demand for mobile and PC may encounter softness, growth in AI will keep demand at robust levels. Against this backdrop, the company will concentrate on driving sales of high-bandwidth memory and high-density products," Samsung said. Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Samsung posts weaker profit recovery as it misses out on AI boom

SEOUL, Oct 31 (Reuters) - Samsung Electronics (005930.KS), opens new tab said its third-quarter profit jumped from a year earlier, but the pace of recovery weakened from the prior quarter as it struggles to cash in on the AI boom that has benefited chip rivals like TSMC (2330.TW), opens new tab and SK Hynix (000660.KS), opens new tab. The world's biggest maker of memory chips, smartphones and TVs posted on Thursday an operating profit of 9.2 trillion won in the July to September period, compared with 2.4 trillion won a year earlier and 10.4 trillion won the previous quarter. The third-quarter result was slightly above Samsung's preliminary estimate of 9.1 trillion won flagged earlier this month, which was below market expectations at the time. The South Korean company this month made a rare apology for its disappointing earnings, citing "delays" in sales of its advanced chips to an unidentified major customer and rising supply of traditional chips from Chinese rivals. Artificial intelligence is the only bright spot in the sluggish chip market, but Samsung has been struggling to supply high-end semiconductors used in Nvidia's AI chipsets, making the South Korean company more vulnerable to lacklustre demand for traditional chips used in PCs and smartphones. In contrast, SK Hynix and TSMC posted strong third-quarter profits, thanks to AI chip sales to industry leader Nvidia (NVDA.O), opens new tab. Reporting by Hyunjoo Jin, Joyce Lee and Heekyong Yang; Editing by Jamie Freed Our Standards: The Thomson Reuters Trust Principles., opens new tab

Sluggish chip sales curtail Samsung's profits, worrying investors - SiliconANGLE

Sluggish chip sales curtail Samsung's profits, worrying investors Samsung Electronics Co. Ltd.'s third quarter profit jumped by 73% from a year earlier, but although that number sounds good, it wasn't nearly enough to satisfy investors. That's because the pace of acceleration was significantly lower than it was just three months ago, increasing investors' concerns that the company is struggling to cash in on the artificial intelligence chip boom. The world's biggest manufacturer of memory chips, TVs and smartphones also warned that its earnings growth in the current quarter will be "limited", as it expects growing chip sales to be offset by weaker sales of TVs, smartphones and home appliances. The company reported an operating profit of 9.2 trillion won ($6.66 billion) in the quarter, up from a profit of just 2.4 trillion won one year earlier, but down from the 10.4 trillion won it delivered in the second quarter. Samsung's profit came in slightly ahead of its earlier estimate of 9.1 trillion won, which was flagged three weeks ago and came in just below the analyst target. The small bump in profitability means that Samsung's profits were in-line with expectations, but that didn't have much impact on its share price, which remained flat in early trading in South Korea today. Earlier this month, Samsung issued a rare apology to investors over its disappointing numbers, saying that delayed sales of advanced chips to an unidentified customer had impacted its results. It also said it's seeing increased competition from Chinese rivals for legacy chips. The AI industry is currently the only real bright spot in the semiconductor industry, with sales of traditional chips for personal computers, smartphones and servers being sluggish all year. But Samsung has been unable to capitalize on the AI trend, as Nvidia Corp. buys most of the memory chips for its high-end graphics processing units from other suppliers. Although Samsung's memory chip business delivered an operating profit of 3.9 trillion won in the quarter, up from a loss of 3.8 trillion won a year earlier, it was nowhere near the 6.45 trillion won profit it recorded in the prior quarter. Samsung acknowledged that the picture is unlikely to change anytime soon. "The demand trends experienced in the previous quarter are expected to continue," a spokesperson said, discussing the near-term outlook for the semiconductor market. In addition to the sluggish demand, Samsung's chip earnings were hurt by currency effects resulting from the weak dollar, and one-off expenses involving the provision of incentives for employees. Worse, it's not just Samsung's memory chip business that's struggling. Its foundry business, which manufactures logic chips for other chipmakers, was hit by widening losses in the quarter. The lackluster performance of the chip business has reportedly persuaded Samsung to postpone the delivery of high-end chipmaking equipment from the Dutch company ASML Holding NV. Reuters said Samsung had been planning to install ASML's machinery at its new factory in Texas, but because it has not yet landed any significant orders from customers, it has now decided to put that plan on the back burner. Unfortunately for Samsung, its mobile devices business didn't provide investors with much to cheer about either, with its operating profit falling to just 2.8 trillion won in the quarter, down from 3.3 trillion won a year earlier. Samsung's stock is down around 25% in the year to date, which contrasts poorly with rival chipmkers such as SK Hynix Inc. and Micron Technology Inc., which have gained 30% and 20% respectively. Meanwhile, shares of Taiwan Semiconductor Manufacturing Co., its biggest rival in the chip sector, have risen more than 70% this year.

Samsung Profits Soar, But Company's Nvidia AI Chip Race Lag Allows SK Hynix, Micron To Take The Lead In High-Bandwidth Memory - Micron Technology (NASDAQ:MU), SK Hynix (OTC:HXSCF)

Samsung Electronics SSNLF, South Korea's largest company, reported a net income of 9.78 trillion won ($7.1 billion) for the September quarter, with its chip division earning 3.86 trillion won ($2.8 billion) in operating profit. Artificial intelligence and data center server demand remained strong, though mobile chip sales dipped due to inventory adjustments. Samsung's delays in NVIDIA Corp's NVDA certification for AI memory chips have allowed competitors SK Hynix HXSCF and Micron Technology Inc MU to lead in high-bandwidth memory. SK Hynix recently posted a record 7.03 trillion won in profit, intensifying pressure on Samsung in a rapidly evolving memory chip market. Read Next: Microsoft's AI Momentum Could Propel $4 Trillion Market Cap In 6-9 Months Amid 'Robust' Q1 Earnings, Says Dan Ives: 'This Is a Company Firing on All Cylinders' Image Via Shutterstock Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Market News and Data brought to you by Benzinga APIs

Samsung posts weaker profit recovery as it misses out on AI boom

SEOUL (Reuters) - Samsung Electronics said its third-quarter profit jumped from a year earlier, but the pace of recovery weakened from the prior quarter as it struggles to cash in on the AI boom that has benefited chip rivals like TSMC and SK Hynix. The world's biggest maker of memory chips, smartphones and TVs posted on Thursday an operating profit of 9.2 trillion won in the July to September period, compared with 2.4 trillion won a year earlier and 10.4 trillion won the previous quarter. The third-quarter result was slightly above Samsung's preliminary estimate of 9.1 trillion won flagged earlier this month, which was below market expectations at the time. (Reporting by Hyunjoo Jin, Joyce Lee and Heekyong Yang; Editing by Jamie Freed)