Samsung Electronics reported a 274% year-on-year increase in its third-quarter operating profit, reaching 9.1 trillion Korean won (approximately $6.78 billion). However, this figure fell short of analysts' expectations of 10.3 trillion won. In comparison, last year's profit for the same period was 2.43 trillion won, and the previous quarter was 10.44 trillion won. Samsung's sales for the third quarter stood at 79 trillion won, lower than the forecasted 81.57 trillion won.
Following the financial disclosure, Samsung's share price dropped by 1.3%. The company has scheduled a third-quarter earnings call for October 31. Samsung highlighted that the chip segment faced declining profits. This was attributed to increased supply of conventional chip products by Chinese competitors and inventory adjustments by mobile clients, which offset the strong demand for high-bandwidth memory (HBM) and server chips.
Samsung, the world's largest memory chip manufacturer for three decades, is experiencing intensified competition in both traditional and advanced chip sectors. High-margin chips used in AI servers are currently driving a global market recovery, despite last year's downturn. Nevertheless, Samsung lags behind its peer SK Hynix in supplying HBM chips to AI leader Nvidia.
Amidst these challenges, Samsung appointed a new head for its chip business, Jun Young-hyun, who emphasized the need for a cultural shift to avoid falling into a "vicious cycle." Analysts note that demand for mass-market chips used in PCs and smartphones remains weak, affecting Samsung more than its competitors due to its reliance on these products.
After the earnings announcement, the head of Samsung's chip business issued an unusual apology, acknowledging concerns about the company's technological edge and the perceived crisis Samsung faces. It is forecasted that the semiconductor division's operating profit for the third quarter will be around 5.3 trillion won.
