Samsung Electronics reported a 129.85% surge in operating profits year-on-year in the fourth quarter of 2024, but fell short of expectations due to weak demand for its chips used in artificial intelligence servers.
The company’s sales rose 11.8% to 75.78 trillion won, while net income increased by 22.2%. However, the Q4 operating profit was lower than the previous quarter, mainly due to soft market conditions and increased R&D expenditures.
Samsung’s struggles in meeting demand for AI chips have been attributed to its rivals, including SK hynix and Micron. The company has lost ground in the semiconductor AI boom cycle, with its technology leadership eroded over the last few years.
However, Bloomberg reported that Samsung has obtained approval to supply a version of its fifth-generation high-bandwidth memory chips to Nvidia. This could potentially give Samsung an edge in the market.
The arrival of Chinese startup DeepSeek has raised questions about whether the vast sums invested in AI have been overdone. DeepSeek’s R1 chatbot has reportedly shown the ability to match US AI pace-setters for a fraction of the investments made by American companies.
This could be a “blessing in disguise” for Samsung, allowing them to perfect their solution or lower costs. The company’s shares were down 2.42% in early trade in Seoul.
Source: https://www.livemint.com/companies/company-results/samsung-electronics-posts-129-percent-jump-in-q4-operating-profit-business-company-results-chips-ai-servers-tech-news-11738290183892.html