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Korea’s largest company reported preliminary operating profit of 6.5 trillion won ($4.5 billion) for the December quarter, falling short of analysts’ average projection for 8.96 trillion won. Revenue came to 75 trillion won, just shy of estimates. Its shares fell as much as 1.3% Wednesday morning in Seoul before recouping losses.
Investors had braced for disappointing results from an electronics conglomerate falling further behind rivals SK Hynix Inc. and Micron Technology Inc. in the lucrative AI arena. Samsung has struggled to get its latest products certified by Nvidia Corp., allowing SK Hynix in particular to carve out a larger slice of the market for the high-bandwidth memory that AI accelerators depend on.
The world’s biggest memory maker shouldered bigger research and development expenses and front-end capacity expansion costs in its effort to catch up in the fast-growing AI market. That’s even as demand for Samsung’s conventional semiconductor line-up for PCs and mobile devices weakened, according to a statement. Growing competition also hurt its mobile devices segment, while the operating rate in its foundry business dropped, it said. Samsung will provide a full financial statement with net income and divisional breakdowns later this month.
“Samsung is just going through one of its toughest moments in its history,” Counterpoint analyst Tom Kang told Bloomberg Television. Samsung missed the high-bandwidth memory boom and needs to show it’s supplying AI memory to new clients. “They are really trying hard to catch up.”
Investors remain cautious about Samsung’s ability to catch up in the high-end memory market. Samsung’s chip division is struggling to regain its pandemic-era heights and risks slipping further behind SK Hynix, which in October posted record profit. Keeping up requires high research and development and capacity expansion costs, which are weighing on profitability.
Billions of dollars are at stake, however. Just last week, Microsoft Corp. said it plans to spend $80 billion building out data centers this fiscal year alone, triggering a broad rally in SK Hynix and other AI beneficiaries.
Samsung also remains exposed to weak mobile chip sales and is grappling with a rising supply of legacy chips in China. Demand for its smartphone chips is expected to stay weak in 2025, executives said in October. In the TV and home appliances arenas, steep price competition from Chinese manufacturers is also eating margins.
Last year, Samsung chip division chief Jun Young-hyun apologized for disappointing results and acknowledged delays in winning Nvidia certification.
Samsung must now review its organizational culture and processes, Jun had said — echoing previous comments about the need for fundamental change at one of Korea’s oldest companies. It’s begun laying off workers in Southeast Asia, Australia and New Zealand as part of a plan to reduce global headcount by thousands of jobs, Bloomberg News reported.
