SEOUL (Reuters) – Samsung Electronics is expected to flag more than a four-fold jump in quarterly profit on Tuesday on improving demand for chips, but the pace of its recovery is weakening, as it is slow to cash in on the artificial intelligence boom. #SamsungProfitRecovery
Samsung’s operating profit likely reached 10.33 trillion won ($7.67 billion) for the quarter ending Sept. 30. The estimate comes from an average of 29 analysts with LSEG SmartEstimate. This figure is based on analysts known for their consistent accuracy.
This figure jumps from 2.43 trillion won a year earlier, but it remains nearly unchanged from 10.44 trillion won last quarter.
The global semiconductor market is recovering from last year’s downturn, led by AI server chips. However, demand for conventional chips is slowing. Analysts note this slowdown affects chips used in smartphones and PCs.
The South Korean company is trying to catch up with smaller rivals SK Hynix and Micron in supplying high-end AI chips to Nvidia. At the same time, it faces increasing competition from Chinese rivals for commodity chips.
Samsung’s main chip division is expected to report an operating profit of 5.5 trillion won this year. However, this profit marks a 15% decline from the previous quarter. Analysts noted that the decrease is also due to Samsung setting aside provisions for bonuses.
Analysts say Samsung’s delayed response to the profitable AI chip market has increased its vulnerability to geopolitical risks. Additionally, its greater exposure to China and traditional mobile chips has resulted in weaker demand compared to its peers. #SamsungProfitRecovery
“Samsung is more likely to lose the title of number 1 DRAM vendor in case of a softer commodity DRAM market,” Daniel Kim, an analyst at Macquarie Equity Research said in a recent note, referring to dynamic random access memory (DRAM) chips that are widely used in computers and smartphones.
“That is, the conventional DRAM supply glut will likely hurt Samsung far more than SK Hynix.”
Challenges in Semiconductor Demand Continue to Hinder Samsung’s Profit Recovery
Moreover, the decline in semiconductor demand is also contributing to this slowdown. While the company has invested heavily in new technology, the current market environment remains unfavorable. Consequently, Samsung profit recovery continues to struggle amid these industry-wide issues.
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