Samsung Electronics is expected to report a more than fourfold increase in quarterly profit on Tuesday, driven by a recovering semiconductor market.
Analysts forecast an operating profit of 10.33 trillion won (USD 7.67 billion) for the quarter ending 30 September, a sharp rise from 2.43 trillion won a year earlier. However, the results are only marginally down from the previous quarter's 10.44 trillion won, suggesting that the company's momentum may be slowing.
While the global demand for memory chips, particularly those used in AI servers, has been improving, Samsung's response to the AI chip boom has lagged behind its competitors. The company has struggled to keep pace with smaller rivals SK Hynix and Micron, both of whom have gained ground in supplying high-end AI chips to tech giants like Nvidia. As a result, Samsung's chip division is expected to post a profit of 5.5 trillion won, but this marks a 15 per cent decline from the previous quarter due to the company's slower adaptation to the AI trend and bonuses set aside for employees.
Samsung’s reliance on conventional chips for smartphones and PCs, along with its significant exposure to the Chinese market, has left it more vulnerable to geopolitical risks and fluctuating demand. Analysts warn that the company could lose its top position as the leading DRAM chipmaker if the commodity chip market weakens further. By contrast, Micron recently posted its strongest revenue in over a decade, buoyed by the surge in AI chip demand, highlighting Samsung’s challenges in the sector.
In addition to struggles in its semiconductor business, Samsung’s mobile division has been hit by disappointing sales of its premium foldable smartphones. The company's mobile and network businesses are estimated to report an operating profit of 2.6 trillion won for the third quarter, down 20 per cent from the previous year. Increased competition from Chinese rivals such as Huawei has further pressured the South Korean giant's mobile segment.
The company has already taken cost-cutting measures, including a reported reduction of up to 30 per cent of overseas staff in some divisions, stressing the difficulties it faces. Despite this, Samsung's shares have fallen 23 per cent this year, significantly underperforming SK Hynix, which has seen a 23 per cent rise. Samsung is set to release its preliminary earnings on Tuesday, with full figures to follow later this month.
(Inputs from Reuters)
