South Korea’s Samsung Electronics said on Thursday that its operating profit rose 277 percent year-on-year to $6.6 billion, but failed to meet expectations as it struggled to meet demand for chips used in artificial intelligence servers.

The world’s largest memory chip maker reported an operating profit of 9.18 trillion won ($6.6 billion) “largely due to one-time costs.”

It also warned in a statement that “Korea’s strength is gaining against Korea.” US dollar had a negative impact on company-wide operating profit”.

Although operating profit nearly tripled from a year ago, it fell short of market expectations and fell 12 percent from the previous quarter.

Samsung recorded its highest quarterly record, with revenue rising 17.35 percent to 79.1 trillion won ($57.2 billion).

The firm is the flagship subsidiary of South Korean giant Samsung Group and is by far the largest of the family-controlled conglomerates. business Asia’s fourth largest economy.

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Semiconductors are the lifeblood of the global economy, used in everything from kitchen appliances to mobile phones, cars and weapons.

The company’s semiconductor division reported operating profit of 3.86 trillion won, down 40 percent from last quarter.

Samsung said its performance declined due to “reduced inventory valuation loss reversals compared to the previous quarter, one-time expenses such as providing incentives, and currency impacts from a weaker dollar.”

rare apology

Samsung lags behind South Korean giant SK hynix when it comes to high-bandwidth memory (HBM) chips used in AI chipsets, and experts blame this for lackluster results.

This month, Samsung management issued a rare and separate apology, acknowledging that the company was facing a “crisis.”

“Results that fell short of market expectations raised concerns about our core technological competitiveness and the future of the company,

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The statement signed by Jun Young-hyun, vice president of the company’s device solutions department, said:

“Our administration will take the lead in overcoming the crisis… We will turn the serious situation we are currently facing into an opportunity for revival.”

Samsung shares have fallen 33 percent since their peak in July, and the company has lost over $120 billion in market value during that time.

The market capitalization gap between Samsung Electronics and SK hynix reached its narrowest level in 13 years last week.

Samsung shares rose 0.3 percent in early trading Thursday in Seoul.

The rare apology came nearly a week after the tech giant announced plans to cut staff at some of its Asian operations, describing the move as “routine workforce adjustments.”

Bloomberg reported that layoffs could affect about 10 percent of the workforce in these markets.

Strong AI demand

Next quarter, Samsung expects current demand for its memory business to continue and aims to “strengthen business fundamentals” by normalizing inventory levels.

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“While there may be softness in memory demand for mobile and PC in the fourth quarter, growth in artificial intelligence will keep demand at strong levels,” he added.

Experts said that the decline in prices in the memory industry could affect Samsung.

However, Samsung is expected to increase shipments of its most advanced chips in the coming quarter. April Wu is senior vice president of research at TrendForce.

“The company’s fourth-quarter profit will be sustainable,” he said.

But he added that if Samsung cannot get certification of its high-capacity HBM3E chips in time, “this will put pressure on Samsung’s gross margin performance.”

Source: AFP