Samsung Electronics has announced its operating profit for the third quarter at 9.2 trillion won (approximately $6.66 billion), slightly surpassing its earlier projections of 9.1 trillion won.
However, the figure still reveals a decline from the previous quarter’s profit of 10.4 trillion won as the company faces some challenges within its semiconductor division.
The semiconductor sector, which is essential to Samsung’s profitability, had a downturn, with operating profit plummeting to 3.9 trillion won from 6.5 trillion won in the previous quarter.
This decline has left investors bothered, especially in light of the company’s recent apology for its underwhelming earnings, attributed to delays in high-bandwidth memory (HBM) sales and increased competition from Chinese firms.
In response to investor apprehensions, Samsung executives revealed a strategic move towards producing high-end chips.
Jaejune Kim, executive vice president, noted on an earnings call that progress has been made on a major supply agreement, particularly in qualifying HBM3E chips for a significant client, widely speculated to be Nvidia, which commands around 80% of the AI chip market.
Kim believes there will be increased sales of these advanced chips in the upcoming quarter.
Although Ryu Young-ho of NH Investment & Securities commented that Samsung’s progress in supplying HBM3E chips to Nvidia is an important step in reviving its HBM business, he cautioned that the company still faces limitations.
Meanwhile, SK Hynix, another major player in the semiconductor industry, saw a drop in its shares following Samsung’s announcements, amid fears of an oversupply in the HBM market.
Samsung’s latest earnings statement acknowledged a challenging sector, with traditional chip demand declining for personal computers and smartphones, offset by growth in the AI sector.
The company projected limited earnings growth in the fourth quarter, as competition within the consumer electronics market intensifies during the important year-end sales period.
The disparity in performance between Samsung and its rivals is becoming increasingly evident. SK Hynix reported a record operating profit of 7 trillion won, driven by robust sales of AI chips, showcasing the competitive pressures Samsung faces.
Again, the South Korean tech giant is struggling with issues beyond the chip division, as its mobile devices segment reported a decline in operating profit, falling to 2.8 trillion won from 3.3 trillion won a year prior.
