Wall Street Breakfast: Behind The Curve

Behind the curve

Samsung Electronics (OTCPK:SSNLF) has issued a rare apology after warning of weaker-than-expected Q3 profit, as the South Korean tech giant struggles to keep up with rivals in the artificial-intelligence chip race. The world’s biggest memory chipmaker’s preliminary estimate for Q3 operating profit is 9.1T won ($6.74B), down 12.8% from Q2. Sales are expected to rise 6.7% sequentially to 79T won ($58.57B).

What went wrong: “Despite strong HBM/server demand, the Memory Business recorded a decrease in results due to inventory adjustments by some mobile customers and an increase in supply of legacy products from memory companies in China,” Samsung said in a statement. “One-off expenses and currency effects also impacted performance.” It added that the delivery of HBM3E chips to a major unnamed customer was delayed.

Falling behind: The high-bandwidth memory chips were reportedly cleared for use in Nvidia’s (NVDA) AI processors in August. To note, South Korea’s SK hynix (OTCPK:HXSCF) and U.S. chipmaker Micron Technology (MU) also produce HBM3E chips with higher bandwidth that’s key for AI memory. SK hynix, which has been speeding ahead with HBM3E development, recently began mass production of the world’s first 12-layer HBM3E product with the largest capacity of existing HBM. A Bank of America analyst recently said HBM is a “two horse race” between Micron and SK hynix.

Taking accountability: Jun Young-hyun, head of Samsung’s device solutions, said management takes full responsibility for the disappointing performance that “raised concerns about the fundamental technological competitiveness and the future of the company.” Samsung pledged to restore its competitiveness, prepare for the future more thoroughly, and fix any organizational culture issues. Samsung will report its financial results on October 31. (2 comments)

Be the first to comment

Leave a Reply

Your email address will not be published.


*