Samsung issues disappointing third-quarter profit outlook as it works on AI chips

This was announced by South Korean technology giant Samsung Electronics. The company expects third-quarter profits to be lower than expected.

In guidance released Tuesday, the world’s top memory chip maker said operating profit for the quarter ending in September is expected to be about $2,000. 9.1 trillion wonThis marked a 274% jump from last year’s 2.43 trillion Korean won. However, this number was lower than LSEG expected.

Analysts surveyed by LSEG had expected operating profit to be 11.456 trillion Korean won ($7.7 billion) for the quarter ending Sept. 30. According to LSEG estimates, Samsung’s sales for the quarter are expected to reach 81.96 trillion won ($61 billion).

“Samsung’s memory business performance decreased as a result of “one-time costs and adverse impacts,” including inventory adjustments by mobile customers and increased supply of legacy products by Chinese memory companies,” Samsung said in a statement.

Samsung is a leading manufacturer of memory chips used in devices such as laptops and servers. It is also the world’s second largest player in the smartphone market.

Shipments of its high-bandwidth memory HBM3E chips to major customers have also been delayed, the company added.

“Well, look at the numbers. It’s very disappointing,” said Daniel Yoo, head of global asset allocation at Korea Yuanta Securities. He also pointed out that demand for legacy chips used in PCs and smartphones, which Samsung relies on, is not growing around the world.

“Samsung isn’t gaining market share as aggressively as we’ve seen in the past, and I think that’s the big issue we’re seeing,” Yoo added.

Analysts at Macquarie Equity Research said in a recent note that “a downturn in conventional DRAM is likely to hurt Samsung more than its smaller rivals, so the company remains flexible in controlling its memory supply. We need to continue.” DRAM refers to dynamic random access memory chips commonly used in laptops, workstations, and PCs.

Reuters reported in September, citing two people familiar with the matter, that Samsung had instructed its subsidiaries around the world to cut staff in some departments by 30%.

Samsung Electronics’ stock price, listed on the Korea Stock Exchange, has fallen 22% since the beginning of the year, according to LSEG data. The company plans to announce details of its third quarter financial results later this month.

Following the guidance announcement, Samsung’s stock price fell 0.98%.