Samsung expects sharp decline in Q4 profits amid AI chip supply challenges

Samsung Electronics announced on Wednesday that it expects its fourth-quarter profits to experience a significant decline compared to the previous quarter, falling short of forecasts as it faces difficulties meeting strong demand for chips used in artificial intelligence servers.

The announcement comes after the world's largest memory-chip maker issued a rare apology in October acknowledging it was facing a "crisis" and that questions had arisen about its "fundamental technological competitiveness and the future of the company", News.az reports, citing AFP.

It said in a regulatory filing that October-December operating profits were expected to come in at 6.5 trillion won ($4.5 billion), up 130.5 percent from a year earlier.

But that is down nearly 30 percent from 9.18 trillion won in the previous three months and 16 percent below the average estimate, according to the Yonhap news agency, which cited its own financial data firm.

Sales were seen increasing 10.7 percent on-year to approximately 75 trillion won, which was also lower than the previous quarter.

"In light of the preliminary fourth-quarter 2024 results significantly falling short of market expectations, we aim to mitigate confusion among the market and investors until the final results are announced," Samsung's management said in an explanation page.

It noted that Samsung's Device Solutions division, which is in charge of memory and foundry business units, among others, "reported declines in sales and profits due to worsening market conditions, particularly for IT-related products".

"Despite achieving record-high quarterly revenue in the fourth quarter, driven by strong sales of high-capacity products, weak demand for conventional PC and mobile products weighed on overall performance," it said.

News.Az