Samsung Electronics Co Ltd announced a lower-than-expected third-quarter profit estimate on Tuesday, as an initial boost from artificial intelligence demand now appeared to be running out of steam.
Although the estimated profit increased nearly fourfold, it still fell short of analysts’ expectations, causing the tech giant to issue a rare apology for falling behind its competitors in the booming AI chip market.
The South Korean conglomerate, the world’s largest producer of memory chips, smartphones, and TVs, estimated an operating profit of 9.1 trillion won ($6.78 billion) for the 3 months ending September 30. This figure is four times the 2.43 trillion won from the same period last year but lower than the 10.44 trillion won in the previous quarter.
Samsung’s stock, which has already dropped more than 20% this year, fell another 1.2% after the earnings report was announced.
Samsung has been the world’s largest memory chip producer for three decades but is now facing growing competition in both conventional and advanced chip sectors.
Samsung is racing to catch up with smaller rivals SK Hynix Inc and Micron Technology Inc in producing advanced memory chips for use in AI applications.
While demand from the AI industry has boosted memory chip sales, especially those used in servers and data centers, Samsung has been struggling with slowing demand for chips used in personal devices.
“We have caused concerns about our technical competitiveness, with some talking about a crisis facing Samsung,” said Young Hyun Jun, Vice President of Samsung Electronic Device Solutions Division.
“These are testing times” he said, promising to turn the challenge into an opportunity and to focus on improving the long-term technological competitiveness.
