Samsung Electronics’ semiconductor division reported a smaller-than-expected profit in its latest quarter, as the company fights to close the gap with rival SK Hynix Inc. in the artificial intelligence arena.
The company increased research and operating costs, which led to long-delayed approval for its supply of 8-layer HBM3E memory chips from Nvidia Corp. This effort is aimed at supplying AI processors tailored for the Chinese market.
However, Samsung’s semiconductor unit reported an operating profit of 2.9 trillion won for the December quarter, missing analysts’ average projections. The company forecast limited earnings growth in the current quarter due to exposure to legacy DRAM and US export restrictions on AI chips.
Despite this, Samsung executives expressed confidence that they can overcome these challenges and enter a new phase of growth. They plan to focus on cutting their exposure to conventional DRAM and NAND while chasing higher-margin arenas like server DRAM and HBM.
The company has stepped up spending on research and development and front-end capacity expansion in its efforts to catch up with SK Hynix and Micron Technology Inc. However, investors remain concerned about Samsung’s ability to claw back into the market for high-bandwidth memory chips designed for Nvidia’s AI accelerators.
SK Hynix posted record quarterly income earlier this month, eclipsing Samsung’s operating profit for the first time. The company’s shares dropped 9.9%, reflecting concerns that its low-cost AI technology may disrupt the entire premise of big spending on datacenters and powerful chips.
Source: https://finance.yahoo.com/news/samsung-chip-profit-misses-costly-001244065.html