Samsung Electronics, the world’s top memory chip maker, is expected to report Wednesday that its profit growth continued to slow in the fourth quarter as it struggled to meet Nvidia’s strong demand for artificial intelligence chips.
Samsung, which is also the world’s largest smartphone and TV maker, is expected to estimate that its operating profit rose to 8.2 trillion won ($5.6 billion) in the quarter ended December, up from a low base of 2.8 trillion won a year earlier, but down from 9.18 trillion won in the previous quarter.
Many analysts have lowered their profit estimates in recent weeks, with some expecting operating profit to fall below 8 trillion won.
In October, the South Korean company rarely apologized for its disappointing third-quarter results and said it was making progress in supplying artificial intelligence chips to Nvidia.
But it has provided no updates since, and delays in supplying high-end chips to Nvidia have continued to weigh on its profits, analysts say.
In November, Samsung replaced some of its senior executives in the chip division, while also naming its division head co-CEO and giving him direct control of its struggling memory chip business.
Shares of Samsung, South Korea’s largest stock, fell 32% last year, posting a 10% loss compared to the broader market.
In contrast, Samsung’s rival SK Hynix, one of Nvidia’s main suppliers of memory chips for artificial intelligence, is expected to post record profits in the fourth quarter, analysts say.
PRICES UNDER PRESSURE
Weak demand for traditional chips used in cellphones and computers and increased production by Chinese rivals have put pressure on chip prices, analysts say.
Last month, US chipmaker Micron Technology reported quarterly revenue and profit below Wall Street analysts, sending shares lower as weak demand for consumer products impacted earnings. activities of rival Samsung.
Prices for DDR4 DRAM chips used in personal computers fell 13% in the fourth quarter and are expected to fall another 15% in the current quarter, according to estimates from researcher TrendForce.
This decline offset the positive impact of the weakening of the local currency, which boosts profits repatriated from abroad.
South Korea’s won fell to its weakest level in 15 years in December after President Yoon Suk Yeol’s martial law decree sparked political unrest and U.S. President-elect Donald Trump calls for higher tariffs on imports.
Samsung’s business of making logic chips designed by customers such as Qualcomm is expected to continue to post losses, eroding its chip sector profits, analysts say.
Samsung will announce fourth-quarter revenue and operating profit estimates on Wednesday, and plans to release detailed results including a breakdown of profits for each of its businesses in late January.
(1 $ = 1 464.6300 won)
