Samsung Electronics (005930.KS) said its third-quarter profit jumped from a year earlier, but the pace of recovery weakened from the prior quarter as it struggles to cash in on the AI boom that has benefited chip rivals like TSMC (2330.TW) and SK Hynix (000660.KS).
The world's biggest maker of memory chips, smartphones and TVs said it expected limited earnings growth in the current quarter, as growth in chip division would be offset by weakness in its "set" business. The latter typically refers to smartphones, TVs and home appliances, but it did not elaborate further.
Samsung posted on Thursday an operating profit of 9.2 trillion won ($6.66 billion) in the July to September period, compared with 2.4 trillion won a year earlier and 10.4 trillion won the previous quarter.
The third-quarter result was slightly above Samsung's preliminary estimate of 9.1 trillion won flagged earlier this month, which was below market expectations at the time. Shares fell 0.2% in early trading on Thursday, with the wider South Korean market (.KS11) down 1.3%.
The South Korean company this month made a rare apology for its disappointing earnings, citing "delays" in sales of its advanced chips to an unidentified major customer and rising supply of traditional chips from Chinese rivals.
Artificial intelligence is the only bright spot in the sluggish chip market, but Samsung has been struggling to supply high-end semiconductors used in Nvidia's AI chipsets, making the South Korean company more vulnerable to lacklustre demand for traditional chips used in PCs and smartphones.
CHIP EARNINGS FALL
Samsung's chip division swung to an operating profit of 3.9 trillion won in the third quarter from a loss of 3.8 trillion won a year earlier, but that was down from 6.45 trillion won the preceding quarter, as the chip market recovery remained weak.
"The demand trends experienced in the previous quarter are expected to continue," the company said, referring to the outlook for the semiconductor market in the fourth quarter.
Samsung said its chip earnings were hurt by one-off expenses such as the provision of employee incentives, and currency effects due to a weak dollar.
SK Hynix had posted a record third-quarter operating profit of 7 trillion won and TSMC also had a strong result during that period thanks to AI chip sales to industry leader Nvidia (NVDA.O).
Samsung is struggling to compete against rivals not only in its mainstay memory chip business, but also in its foundry business that designs and produces logic chips for other clients. Analysts say Samsung's logic chip business suffered from widening losses in the third quarter.
The company has postponed taking deliveries of ASML's (ASML.AS) high-end chipmaking equipment for its upcoming factory in Texas as it has yet to win any major customers for the project, sources previously told Reuters.
Samsung's mobile devices business also saw its third-quarter operating profit dropping to 2.8 trillion won from 3.3 trillion won a year earlier.
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