HomeTechnologySamsung apologizes for disappointing performance amid AI struggles

Samsung apologizes for disappointing performance amid AI struggles

Date:

Popular News

Samsung Electronics issued an apology on Tuesday for its disappointing efficiency, warning that its third-quarter revenue would come beneath market expectations, with the tech large lagging behind its rivals in supplying high-end chips to Nvidia within the booming AI market.

The uncommon apology illustrates the challenges going through the corporate, which has been the world’s greatest reminiscence chipmaker for 3 a long time however is battling rising competitors in each typical and superior chips.

Samsung stated its AI chip business with an unidentified main buyer was hit by a delay, whereas Chinese chip rivals elevated provides of typical chips, contributing to the decline in its semiconductor earnings.

The world’s largest reminiscence chip, smartphone and TV maker estimated an working revenue of 9.1 trillion gained ($6.78 billion) for the three months ended Sept. 30, versus a ten.3 trillion gained LSEG SmartEstimate.

That would examine with 2.43 trillion gained in the identical interval a yr earlier and 10.44 trillion gained within the previous quarter.

“The earnings are a shock compared to what many analysts expected initially,” stated Lee Min-hee, an analyst at BNK Investment & Securities.

“I don’t see its earnings improving in the current quarter,” he stated, saying it lags behind SK Hynix in rising gross sales of excessive bandwidth reminiscence (HBM) chips to Nvidia and its excessive publicity to the Chinese market hurts.

Samsung’s late response to the AI chip market will increase its reliance on conventional, lower-margin chips, making it extra weak to competitors from China and slowing demand for smartphones and PCs, analysts say.

High-margin chips utilized in AI servers are driving a restoration within the chip market after a post-pandemic downturn final yr. Still, Samsung has lagged SK Hynix in supplying high-bandwidth reminiscence (HBM) chips to AI chief Nvidia.

“We have caused concerns about our technological competitiveness, with some talking about the crisis facing Samsung,” Young Hyun Jun, Vice Chairman, Device Solutions Division, Samsung Electronics, stated.

“These are testing times,” he stated, pledging to show the problem into a chance and concentrate on enhancing long-term technological competitiveness.

Samsung’s share value has already dropped greater than 20% this yr, falling 1.3%, underperforming a 0.4% fall within the benchmark KOSPI.

HBM chips delayed

Samsung stated in a press release that the gross sales of its high-end HBM3E chips to a significant buyer have been “delayed relative to our expectations.” It didn’t elaborate on the difficulty.

The firm stated earlier in July it could begin mass-producing the chips in July or September.

Earnings declined within the firm’s reminiscence chip business as Chinese rivals elevated provides of “legacy” merchandise and a few cellular prospects adjusted inventories, offsetting strong demand for HBM and different chips utilized in servers, Samsung added.

Samsung’s contract chip manufacturing business, which designs and produces custom-made chips for different corporations, possible continued to lose cash within the third quarter as it’s struggling to compete with chief TSMC, which counts Apple and Nvidia amongst its prospects, analysts stated.

Samsung’s chief Jay Y. Lee instructed Reuters on Monday that he’s not concerned with spinning off the contract chip manufacturing business in addition to its logic chip designing operation.

Samsung stated one-off prices equivalent to provisions for “incentives” and the unfavorable native forex additionally contributed to the chip earnings decline.

Earnings in its cellular division improved from the previous quarter on strong gross sales of its flagship smartphones, whereas earnings at its show unit grew as its prospects, which embrace Apple, launched new fashions.

Samsung will announce detailed earnings outcomes on Oct. 31.

In May, Samsung abruptly changed the chief of its semiconductor division, handing the reins to Jun in a bid to beat a “chip crisis.”

Samsung can be reducing as a lot as 30% of abroad employees at some divisions, Reuters reported in September, underscoring the challenges it faces.

Its U.S. rival Micron final month forecasted first-quarter earnings forward of Wall Street estimates and reported its highest quarterly income in over a decade on the again of booming demand for its reminiscence chips utilized in AI.

The Daily Sabah Newsletter

Keep updated with what’s taking place in Turkey,
it’s area and the world.


You can unsubscribe at any time. By signing up you’re agreeing to our Terms of Use and Privacy Policy.
This website is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Source: www.dailysabah.com

Latest News

LEAVE A REPLY

Please enter your comment!
Please enter your name here