Samsung Electronics has announced that its third-quarter profit will fall short of market expectations, citing challenges in its semiconductor business.
The company apologized for the underperformance, acknowledging its struggle to keep pace with competitors in supplying advanced chips to Nvidia in the rapidly expanding AI market.
This statement of regret highlights the difficulties Samsung faces, despite maintaining its position as the world’s leading memory chipmaker for over 30 years.
The company is contending with increasing competition in both traditional and advanced semiconductor sectors.
According to Samsung in a statement, a delay in its AI chip business with a key, unnamed customer contributed to the decline, while Chinese rivals ramped up supplies of conventional chips, further affecting the company’s semi-conductor earnings.
“Today, we, the management of Samsung Electronics, would like to first say sorry to you,” Samsung said in a statement signed by Jun Young-hyun, the vice chairman of its device solutions division.
It added, “Concerns have arisen about our fundamental technological competitiveness and the future of the company because of the results.
“Our management will take the lead in overcoming the crisis.”
The latest results show a nearly three-fold increase from the same period last year, though they are down approximately 13 per cent compared to the previous quarter.
Samsung’s public apology comes about a week after the company announced plans to reduce its workforce in certain Asian markets, referring to the move as part of routine workforce adjustments.
Reports suggest that the layoffs could impact around 10 per cent of employees in those regions, with some speculating that up to 30 per cent of the workforce in certain overseas operations could be affected.
Samsung has fallen behind South Korean competitor SK Hynix in the production of high bandwidth memory (HBM) chips, which are crucial for AI chipsets. This lag is considered a major factor behind the company’s profit warning, according to Kim Dae-jong of Sejong University in Seoul.
“Given the situation, it seems that Samsung has also lost a substantial number of employees with expertise in HBM to SK Hynix,” Kim told AFP, adding that the company faces a “grave situation.”
Samsung’s shares dropped 1.31 per cent in afternoon trading in Seoul, and the stock has declined nearly 30 per cent over the past six months.
In response, Samsung stated that management would promptly evaluate and implement any necessary changes to our workplace culture.