By Hyunjoo Jin and Heekyong Yang
SEOUL (Reuters) -Samsung Electronics mentioned it might give attention to producing high-end chips to enhance profitability after reporting a 40% quarter-on-quarter plunge in chip revenue, in a stark distinction with rivals TSMC and SK Hynix that posted document earnings on the AI increase.
The world’s largest maker of reminiscence chips, smartphones and TVs additionally warned on Thursday of restricted earnings progress within the present quarter resulting from intensifying competitors within the client electronics phase throughout the peak year-end demand season.
“In the fourth quarter, while memory (chip) demand for mobile and PC may encounter softness, growth in AI will keep demand at robust levels,” Samsung mentioned in an earnings assertion.
“Against this backdrop, the Company will concentrate on driving sales of High Bandwidth (NASDAQ:) Memory (HBM) and high-density products,” it mentioned, referring to premium reminiscence chips used to make AI chipsets like these produced by trade chief Nvidia (NASDAQ:).
Samsung posted an working revenue of 9.2 trillion received ($6.66 billion) within the July to September interval, in contrast with 2.4 trillion received a yr earlier and 10.4 trillion received the earlier quarter.
The third-quarter end result was barely above Samsung’s preliminary estimate of 9.1 trillion received flagged earlier this month, which was under market expectations on the time. Shares fell 0.2% in early buying and selling on Thursday, with the broader South Korean market down 1.3%.
“Samsung Electronics (KS:) hasn’t commercialised HBM as effectively as its competitors, so its third-quarter performance and fourth-quarter outlook are falling short of market expectations,” mentioned Baik Gil-hyun, analyst at Yuanta Securities.
“It’s anticipated that it will take some time before the business performs as expected.”
The South Korean firm this month made a uncommon apology for its disappointing earnings, citing “delays” in gross sales of its superior chips to an unidentified main buyer and rising provide of conventional chips from Chinese language rivals.
Synthetic intelligence is the one brilliant spot within the sluggish chip market, however Samsung has been struggling to provide high-end semiconductors utilized in Nvidia’s AI chipsets, making the South Korean firm extra susceptible to lacklustre demand for conventional chips utilized in PCs and smartphones.
CHIP EARNINGS FALL
Samsung’s chip division swung to an working revenue of three.9 trillion received within the third quarter from a lack of 3.8 trillion received a yr earlier, however that was down from 6.45 trillion received the previous quarter.
Samsung mentioned its chip earnings have been harm by one-off bills equivalent to the supply of worker incentives, and forex results resulting from a weak greenback.
SK Hynix had posted a document third-quarter working revenue of seven trillion received and TSMC additionally had its best-ever end result throughout that interval due to AI chip gross sales to Nvidia.
Samsung is struggling to compete in opposition to rivals not solely in its mainstay reminiscence chip enterprise, but in addition in its foundry enterprise that designs and produces logic chips for different shoppers. Analysts say Samsung’s logic chip enterprise suffered from widening losses within the third quarter.
The corporate has postponed taking deliveries of ASML (AS:)’s high-end chipmaking tools for its upcoming manufacturing facility in Texas because it has but to win any main clients for the undertaking, sources beforehand informed Reuters.
Samsung’s cellular gadgets enterprise additionally noticed its third-quarter working revenue dropping to 2.8 trillion received from 3.3 trillion received a yr earlier.
($1 = 1,380.3900 received)
