Samsung's profit rises beating estimates after broader biz offsets AI gloom

By Yoolim Lee 

Samsung Electronics Co.’s quarterly profit beat estimates, reflecting how other parts of the Korean tech leader’s sprawling business are helping offset a struggling semiconductor operation. 

 

South Korea’s largest company reported net income of 9.78 trillion won ($7.1 billion) in the September quarter, compared with analysts’ average estimate of 9.14 trillion won. That was despite a one-time drag from performance bonuses, the Suwon-based company said on Thursday. 

 

Samsung has lost about a quarter of its value this year, as the once-dominant memory chipmaker struggled to get its latest chips certified by Nvidia Corp. for use in AI accelerators. That’s provided an unusually long window for SK Hynix Inc. and Micron Technology Inc. to carve out a commanding lead in the lucrative high-bandwidth memory arena.

 

Samsung’s chip division — typically the biggest contributor to profit — posted a less-than-projected 3.86 trillion won operating profit during the three months, versus a 6.45 trillion won profit in the previous quarter. In contrast, Hynix posted a record operating profit of 7.03 trillion won last week.  

Thursday’s earnings emerged three weeks after Jun Young-hyun, head of Samsung’s chip business, apologized for disappointing results. The company admitted at the time to delays in winning certification for its highest-margin and most advanced HBM3E lineup of chips. Samsung had predicted in July they would go into mass-production by the third quarter.

 

Meanwhile, SK Hynix affirmed last week it planned to begin supplying its 12-layer HBM3E in the fourth quarter.

 

Samsung must now review its organisational culture and processes, Jun said this month — 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.

 

Apart from lagging SK Hynix in HBM, it’s also shown little progress against Taiwan Semiconductor Manufacturing Co. in the outsourced production of custom-made chips. 

 

Samsung has said mobile customers are still working through stockpiled chip inventory. And it  warned about increasing competition from legacy or less-advanced Chinese memory chipmakers.