Samsung Electronics has disclosed that it did not meet chip profit forecasts for its fourth quarter, with results falling below the anticipated 3 trillion won (£1.68bn) due to increased competition and stagnant demand.
In its Friday report, Samsung Electronics revealed a 22 per cent year-on-year rise in net profit for the fourth quarter, totalling 7.754tr won (£4.65bn), as reported by .
However, this marked a 23 per cent decrease from the preceding quarter. The company pointed to weak demand for standard memory chips and heightened market competition as reasons for the downturn.
Samsung also recognised setbacks in progressing its high bandwidth memory (HBM) technology, which affected its position in the AI chip sector.
"There will be some temporary restrictions in our HBM chip sales in the first quarter," Samsung’s executive vice president of the memory business, Kim Jae-june, told Reuters.
"We expect some impact on our HBM demand from not just U.S. restrictions on exports of high-end chips but also a shift in demand for improved chips by major clients," he added. The firm has also cautioned that its AI chip sales may lag due to US export limitations to China.
Additionally, Samsung attributed the decline to reduced profitability in its principal semiconductor operations, with the semiconductor division's operating profit dropping to about 2.9tr won (£1.74bn), down from 3.9 won (£2.34bn) in the previous quarter and 6.5tr won in the second.
Rivals such as SK Hynix have gained an edge in this sector, having started mass production of its HMB products last year, while Samsung was still in the testing phase with key clients like Nvidia.
In its mobile division, Samsung's operating profit dipped by 25 per cent from the previous quarter due to heightened competition and the waning impact of its newly launched products.
The television division also saw a 60 per cent drop in profit. Looking forward, the world's largest chip maker anticipates limited overall earnings improvement in Q1 2025 due to ongoing challenges in the semiconductor sector.
However, the company stated that the launch of various new products, such as the latest Galaxy phone series, could bolster its mobile arm. It also forecasts a recovery in the memory market in Q2.
