Samsung Electronics reported a significant increase in its third-quarter operating profit, projecting approximately 9.1 trillion won (around $6.78 billion), a 274% rise from the previous year. However, this figure fell short of analyst expectations, which had predicted an operating profit of 10.3 trillion won. The discrepancy is largely due to challenges in the AI server chip sector.
The company stated that profitability in its memory chip business experienced a decline. This was due to increased supply of traditional products by Chinese competitors and inventory adjustments by some mobile clients, offsetting the strong demand for high-bandwidth memory (HBM) and other server chips.
As the world's largest manufacturer of memory chips, smartphones, and TVs, Samsung has maintained a significant presence in the global memory chip market for three decades. However, it faces escalating competition in both traditional and advanced chip sectors.
In particular, Samsung is lagging behind its competitor SK Hynix in the AI server chip market. While high-margin AI server chips are driving a market recovery, Samsung has not yet secured a competitive edge in supplying HBM chips to AI industry leader Nvidia.
Analysts also noted that Samsung is more reliant than its competitors on commodity chips used in PCs and smartphones, sectors currently experiencing sluggish demand, further impacting Samsung's performance.
Following this announcement, Samsung's stock price dropped by 0.7%. The company's shares have decreased more than 20% this year.
