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Samsung Electronics reported third-quarter operating profit of three.9 trillion won ($2.8 billion) from its chip division, falling far wanting analyst estimates and behind its South Korean rival SK Hynix because the world's largest memory chip maker didn’t could reach full utilization. Take advantage of the boom in artificial intelligence.
Operating profit within the July-September quarter was well below the 6.7 trillion won estimate of analysts surveyed by Bloomberg and the 6.45 trillion won profit reported within the previous quarter.
Chip profits were also much lower than those of domestic rival SK Hynix, which reported record operating profit of seven trillion won last week, highlighting the widening gap in its competitiveness in advanced memory chips. Samsung issued a rare public apology this month for its poor performance because it struggled to maintain up with SK Hynix in high-bandwidth memory chips utilized in AI hardware.
Samsung didn’t pass industry leader Nvidia's qualification tests for advanced HBM chips, but the corporate said Thursday it has made “significant progress” in winning approval of a “major customer” and expects HBM chip sales to extend would rise within the fourth quarter.
Samsung's shares have fallen greater than 30 percent since their peak in July on strong overseas sales, but shares rose 2 percent on Thursday morning on hopes that Samsung could make up lost ground in HBM chips.
The company expects limited profit growth within the fourth quarter attributable to falling demand for DRAM memory chips for mobile devices and computers and increasing supply of older chips in China.
Analysts expressed skepticism about Samsung's business prospects at HBM and expect a serious shakeup amongst the corporate's chip executives next month.
“Samsung stays optimistic about HBM's prospects, but it should not be easy to pass the qualification test and increase HBM earnings,” said an analyst at a foreign brokerage firm, mentioning that Samsung is capable of sell more chips without produce defects.
“It continues to be too early to speak about Samsung regaining the competitiveness of HBM,” the analyst added. “Some of its key storage managers are more likely to get replaced attributable to poor performance.”
In May, Samsung replaced its semiconductor chief to beat the so-called “chip crisis.” The company expects increasing sales of its most advanced HBM3E chips within the fourth quarter and plans to mass produce the next-generation HBM4 chips within the second half of next yr.
SK Hynix announced last week that it plans to ship its latest-generation 12-layer HBM3E chips in the present quarter.
Samsung can also be suffering huge losses in its contract chip manufacturing business because it fails to shut the gap with industry leader TSMC.
The company expects its semiconductor business capital spending to succeed in 47.9 trillion won this yr, barely lower than last yr's 48.4 trillion won, and said it should be “cautious” with spending next yr. be.
Samsung's cell phone division, which makes smartphones, suffered a 15 percent decline in operating profit as Apple and Chinese rivals faced increasing pressure on higher-margin AI-enabled smartphones and foldable phones, respectively. Executives expect the worldwide smartphone market to grow lower than 1 percent next yr.
“Samsung is losing its technological edge not only in HBM but additionally in other advanced memory chips and smartphones,” said Park Ju-geun, head of research group Leaders Index. “To overcome the crisis, the corporate must replace its managers with managers with a more technical focus.”
