Samsung Electronics has reported significant progress in securing a major supply deal for its AI-focused chips, highlighting its strategic pivot in the semiconductor market, despite recent profit fluctuations.
Samsung Electronics has announced progress in securing a major supply deal for its artificial intelligence (AI)-focused chips, a development that could positively impact its semiconductor division amidst recent profit fluctuations. The announcement was made as the South Korean tech giant reported its financial results for the third quarter of the year.
During the July-September period, Samsung’s operating profit rose markedly by over 277% year-on-year to 9.18 trillion won ($6.65 billion). However, this figure was down 12% from the second quarter. The company attributed this decline primarily to non-recurring costs such as employee incentives in the semiconductor sector, as well as the adverse effects of a weaker U.S. dollar.
Samsung’s semiconductor division reported an operating profit of 3.86 trillion won ($2.8 billion) in the third quarter. This was a significant recovery from previous deficits across 2023, yet it marked a substantial decrease from the 6.45 trillion won ($4.67 billion) recorded in the April-June quarter. The uneven results highlight the ongoing challenges in the semiconductor market, despite burgeoning demand for AI and server chips. In contrast, Samsung faced softening demand in its mobile chip sector, as clients adjusted their inventories and Chinese manufacturers increased the supply of older memory products.
A critical focal point for Samsung remains the high bandwidth memory (HBM) market, where it has lagged behind rivals like SK Hynix with the latest HBM3E technology. These chips are integral to advancing AI technology, a sector with growing demand.
Jaejune Kim, Samsung’s Executive Vice President, revealed during a conference call that the company has recently achieved significant progress in qualifying its HBM3E products for a major yet undisclosed client. This advancement has sparked speculation around a potential supply agreement with Nvidia, a dominant American firm known for designing sophisticated AI chips.
Samsung expressed optimism about the future, indicating that while the demand for memory in mobile and PC segments might slow down, the continuous growth in the AI sector is expected to sustain demand at robust levels. The company plans to channel efforts into boosting sales of its high-bandwidth memory and high-density products in the forthcoming months.
The strategic pivot towards AI-focused chips positions Samsung to tap into the expanding tech frontier, despite the various challenges it faces in the semiconductor domain.
Source: Noah Wire Services
