Samsung's AI Delay Dents Profit Forecast Despite Sales Surge

Samsung Electronics recently announced its 2024 third-quarter earnings forecast, expecting sales of approximately 79 trillion won, marking a 17.21% increase from the previous year's 67.40 trillion won. However, the predicted operating profit of 9.1 trillion won fell short of market expectations set at 10.33 trillion won.

The shortfall in operating profit is attributed to Samsung’s delayed reaction to the booming artificial intelligence (AI) market. Compared to its competitor SK Hynix, Samsung has been slower to supply high-bandwidth memory (HBM) chips, impacting its ability to capitalize on the AI demand surge. This has left Samsung more reliant on traditional, lower-margin chips, making it vulnerable to competition and the slowing demand for smartphones and personal computers.

Samsung acknowledged in a statement that the delivery of HBM3E to key clients has been postponed compared to initial expectations. While exact financial data for various business segments were not disclosed, market estimates suggest Samsung’s chip division will post an operating profit of 5.5 trillion won, a 15% decrease from the previous quarter.

The memory chip business is projected to achieve an operating profit of 6 trillion won. Nevertheless, the chip foundry segment is expected to continue reporting losses for the third quarter. Despite these challenges, Samsung Group’s leadership has emphasized its commitment to retaining its semiconductor foundry and logic chip design segments, distinguishing itself from strategies adopted by other industry players.