AI: Samsung Electronics disappoints so much that one of its executives apologizes

© Unsplash/BoliviaInteligente

The situation could almost be called a crisis. Samsung Electronics' financial performance fell short of expectations in the July-September period, dragging newly appointed Jun Young-hyun at the head of the group's semiconductor division, to publish a letter of apology.

Samsung behind on AI

Profits at Samsung’s mobile unit, boosted by the Galaxy S24, improved, as did those at its display-making arm. But that was about it. Because the group’s flagship division, which designs memory chips, underperformed. It usually generates more than half of its revenue. As a result, the company reported a smaller-than-expected increase in preliminary operating profit, which came in at $6.8 billion versus the $8.1 billion expected.

“ We have raised concerns about our technological competitiveness, with some people talking about the crisis that Samsung is facing. We are living in a testing time ,” Jun Young-hyun said in his apology letter. Because Samsung seems to have missed the AI ​​boat, which has allowed the memory chip sector to dramatically recover after a long drought.

It is SK Hynix, another South Korean giant, which is currently leading the way in this field. The company supplies its high-bandwidth memory chips, essential for AI, to GPU leader Nvidia. Micron Technology, the third-largest manufacturer in the industry, expects to record its highest quarterly revenue in more than a decade.

Samsung has clearly not been responsive enough, but is trying to make up for it with its HBM3E chip line, the most advanced to date. However, its sales have been delayed, without the company explaining why. This late response from the Korean behemoth increases its dependence on traditional low-margin chips. It is therefore more vulnerable to competition from China, as well as to the slowdown in demand for smartphones and computers.

© Unsplash/Brian Kostiuk

Stock in free fall

Worse still, Samsung’s foundry business, which produces custom chips for third parties, has recorded another operating loss. The world’s second-largest company, the company is struggling to catch up with Taiwan’s TSMC, which makes processors for Nvidia and Apple Silicon.

“ At Samsung, we have a long tradition of overcoming challenges and turning them into key opportunities. Rather than relying on short-term solutions, we will focus on strengthening our long-term competitiveness ,” Jun Young-hyun said. Samsung's stock price has lost 20% of its value since the beginning of the year.

In an attempt to turn things around, the company will lay off up to 30% of its overseas workforce in some divisions.

• Samsung's third-quarter financial results were particularly disappointing.
• The company is lagging behind in the highly sought-after AI sector, and is being overtaken by competitors.
• The situation is such that the division's head shared an apology letter.

📍 To not miss any news from Presse-citron, follow us on Google News and WhatsApp.

[ ]