Samsung Electronics, recognized as the leading memory chip manufacturer globally, is anticipated to announce on Wednesday a slowdown in its profit growth for the fourth quarter, primarily due to challenges in meeting Nvidia’s significant demand for AI chips.
The South Korean conglomerate, also the largest producer of smartphones and televisions worldwide, is projected to report an operating profit of approximately 8.2 trillion won ($5.6 billion or around Rs. 47,984 crore) for the quarter ending in December. This figure marks an increase from the notably low 2.8 trillion won (around Rs. 16,547 crore) reported a year earlier, yet it represents a decline from the 9.18 trillion won (around Rs. 54,238 crore) recorded in the preceding quarter.
Numerous analysts have revised their earnings expectations in recent weeks, with several predicting that operating profit could dip below 8 trillion won (approximately Rs. 47,267 crore).
In October, Samsung issued an atypical apology for its underwhelming performance in the third quarter and indicated ongoing efforts to enhance its supply of AI chips to Nvidia.
However, no further updates have been provided since then, and the ongoing delays in delivering high-end chips to Nvidia have continued to impact Samsung’s financial performance, as noted by analysts.
In November, the company made significant changes to its chip division’s leadership, appointing its chip division chief as co-CEO and giving him direct oversight of its struggling memory chip operations.
Shares of Samsung, the most valuable company in South Korea, experienced a 32 percent decline last year, significantly trailing the broader market’s 10 percent drop.
In comparison, SK Hynix, Samsung’s local competitor and a key supplier of advanced AI memory chips to Nvidia, is anticipated to achieve record earnings for the fourth quarter, according to analysts.
Market Pressures
Weak demand for conventional chips utilized in mobile devices and PCs, coupled with increasing competition from Chinese manufacturers, has exerted downward pressure on chip prices, experts say.
Micron Technology, a US-based chipmaker, recently projected quarterly revenue and profit figures that fell short of Wall Street expectations, prompting a decline in its stock as diminished demand for consumer-focused products affects its business viability.
Prices for DDR4 DRAM chips, which are commonly used in personal computers, have decreased by as much as 13 percent in the fourth quarter and are expected to fall an additional 15 percent in the current quarter, according to estimates from TrendForce.
This decline has countered any benefits from a weaker local currency, which typically enhances repatriated earnings from international markets.
The South Korean won reached a 15-year low in December, spurred by political upheaval following President Yoon Suk Yeol’s martial law decree, alongside rising tariffs on imports suggested by US President-elect Donald Trump.
Analysts also project that Samsung’s logic chip segment, which produces chips designed by clients like Qualcomm, will continue to face losses, further diminishing its overall chip revenue.
Samsung is set to reveal its fourth-quarter revenue and operating profit estimates on Wednesday and plans to disclose comprehensive results, including detailed earnings breakdowns for all its business sectors, by late January.
© Thomson Reuters 2025
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
