"Samsung Faces Shareholder Scrutiny After AI Chip Setbacks and Stock Decline"

Samsung Electronics, the South Korean tech giant, is bracing for a challenging quarterly earnings call as shareholders and investors demand answers following a disappointing third-quarter profit warning and a significant drop in its stock price. The company, once a dominant force in the global memory chip market, is now grappling with intensified competition in the AI chip sector, particularly from Nvidia and other major players. This has led to a rare apology from Samsung's leadership and a renewed focus on regaining its technological edge.

The third-quarter profit warning, issued on October 31, 2025, revealed an operating profit of 9.1 trillion won ($6.78 billion), falling short of the 10.3 trillion won forecasted by analysts. This marks a stark contrast to the company's performance in the previous quarter, where profits reached 10.44 trillion won. The earnings shortfall has raised concerns about Samsung's ability to compete in the rapidly evolving AI chip market, where high-end AI chips are driving recovery in the semiconductor industry.



Samsung's struggles in the AI chip market are multifaceted. The company has been slow to meet the surging demand for AI-driven chips, particularly those used in servers. This lag has allowed competitors like SK Hynix to gain a foothold, further widening the gap between Samsung and its rivals. Additionally, Samsung's heavy reliance on traditional chips and its high exposure to the Chinese market have added to its challenges. The company's contract chip manufacturing business also faces stiff competition from industry leader TSMC, which counts Nvidia and Apple among its key customers.

The market sentiment towards Samsung, as reflected in its stock price drop, is notably more negative compared to its competitors. Samsung's stock has dropped by more than 20% this year and fell another 1.3% after the earnings warning, underperforming the benchmark KOSPI index, which fell 0.4%. In contrast, shares of two rival makers of high-bandwidth memory—South Korea’s SK Hynix and Micron Technology of the U.S.—have gained more than 20%. TSMC’s shares have jumped about 70% this year. This disparity suggests that investors have more confidence in the competitive positioning and strategic initiatives of Samsung's rivals.

Samsung's vice chairman and head of its semiconductor business, Jun Young-hyun, acknowledged the company's lag in the AI chip market, stating, “We have caused concerns about our technological competitiveness, with some talking about the crisis facing Samsung.” He added, “These are testing times,” while expressing confidence in the company's ability to turn the situation around. Jun also pledged to focus on enhancing Samsung’s long-term technological competitiveness.

To address its current challenges, Samsung is taking several specific steps. These include enhancing technological competitiveness, investing in R&D, capacity expansions, reviewing organizational culture and processes, and future-proofing the business. Samsung's significant investment in R&D and capacity expansions, along with the focus on long-term technological advancements, are strategic moves that can position Samsung as a leader in the AI chip market. The company's historical resilience and its commitment to innovation suggest that these measures could pay off in the future.

However, the immediate impact of these measures may be limited. Samsung's operating profit for the third quarter of 2024 is estimated to be 9.1 trillion won, falling short of the 10.3 trillion won forecasted by analysts. This indicates that the company's current challenges are far from resolved. Samsung's struggles in the AI chip market have been compounded by delays in its supply of HBM3E chips to a major customer, which the company did not name. In a statement, Samsung confirmed the delay, saying that the start of sales for the advanced chips was “delayed relative to our expectations.” This further erodes investor confidence in Samsung's ability to meet market demands and compete effectively with its rivals.

In conclusion, Samsung faces a critical juncture as it seeks to regain its footing in the AI chip market. The company's recent underperformance and stock price drop have raised concerns among shareholders and investors. However, Samsung's commitment to innovation and its strategic initiatives suggest that it has the potential to turn the situation around. The coming quarters will be crucial in determining whether Samsung can regain its technological competitiveness and adapt to the increasingly competitive global market.