Samsung Fails to Meet Q4 Profit Expectations Amid AI Chip Challenges

Seoul, Jan 8 (NationPress) Samsung Electronics announced on Wednesday that its estimated operating profit for the fourth quarter has more than doubled from the previous year, but it did not meet market expectations due to a disappointing performance in its premium memory chips designed for artificial intelligence accelerators.

The leading global manufacturer of memory chips projected an operating profit of 6.5 trillion won ($4.46 billion) for the three-month period ending in December, a significant increase from 2.82 trillion won a year prior, as stated in a regulatory filing.

However, this operating profit figure is 15.7 percent lower than the average forecast from a survey conducted by Yonhap Infomax, the financial data subsidiary of Yonhap News Agency.

Compared to the previous quarter, the operating profit saw a decline of 29.19 percent from 9.18 trillion won.

Samsung's operating profit disappointment comes as a result of ongoing delays in obtaining Nvidia Corp.'s approval for its high bandwidth memory (HBM) chips intended for AI computing.

Investors are closely monitoring whether Samsung can catch up to its domestic competitor, SK hynix Inc., in the HBM sector.

Last year, Samsung issued an apology for its lackluster chip business results and underwent a significant executive reshuffling to focus more on advanced technologies and to navigate the current business challenges.

For the October to December timeframe, revenue rose by 10.7 percent to 75 trillion won from 67.78 trillion the previous year. The company did not provide specific data for net earnings in its guidance.

Looking ahead to the entirety of 2024, operating profit surged nearly fivefold to 32.73 trillion won from 6.57 trillion won in the prior year, according to the filing.

Revenue increased by 15.9 percent to 300.08 trillion won from 258.94 trillion won during the specified period.

As of 10:00 a.m., shares of Samsung Electronics climbed 1.08 percent to 56,000 won, outperforming the broader Korea Composite Stock Price Index, which gained only 0.01 percent.

The company is set to release its final earnings report later this month.