Samsung Electronics is expected to report a slowdown in profit growth for the fourth quarter, reflecting challenges in meeting Nvidia’s surging demand for AI chips. Analysts predict Samsung’s operating profit for the period will reach 8.2 trillion won ($5.6 billion), a significant recovery from the previous year’s 2.8 trillion won but down from 9.18 trillion won in the prior quarter.
The South Korean tech giant has faced scrutiny after missing delivery targets for high-end AI chips promised to Nvidia. Analysts suggest the delays have weighed on earnings, with some revising their forecasts below 8 trillion won. Samsung, which had issued a rare apology in October for its disappointing third-quarter performance, has not provided recent updates on resolving these supply issues.
In response to the setbacks, Samsung revamped its leadership in November, appointing its chip division chief as co-CEO and granting him direct oversight of its struggling memory chip business. Despite these measures, the company’s stock dropped 32% last year, underperforming the wider South Korean market’s 10% decline. Meanwhile, rival SK Hynix, a major supplier of advanced AI memory chips to Nvidia, is expected to post record earnings for the same quarter.
Chip Prices Under Pressure
Beyond AI chips, Samsung faces declining demand for traditional memory chips used in mobile phones and PCs, compounded by increased competition from Chinese manufacturers. Prices of DDR4 DRAM chips fell up to 13% in the fourth quarter and are projected to decline another 15% this quarter, according to TrendForce.
These market pressures have overshadowed the benefits of a weaker South Korean won, which boosts overseas earnings. However, political uncertainties in South Korea and shifting U.S. trade policies have added to the volatility.
Samsung’s logic chip division, which manufactures chips for customers like Qualcomm, continues to operate at a loss, further eroding its chip-related earnings.
The company plans to release its fourth-quarter revenue and operating profit estimates on Wednesday, with detailed results across its business segments expected later this month.
Author’s Opinion
Samsung’s struggles to meet Nvidia’s AI chip demand highlight a critical challenge in the tech industry—balancing innovation with execution. While the AI market offers immense potential, Samsung’s delays underscore the importance of agility in adapting to evolving customer needs. The company’s leadership shake-up shows an acknowledgment of the problem, but whether these moves can restore investor confidence and maintain competitiveness against rivals like SK Hynix remains uncertain.
Featured image courtesy of Atlas Logistics Network
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