Samsung's Q3 Profit Drop Due to AI Chip Shipment Delays

In South Korea, Samsung Electronics has forecasted a significant decline in its operating profit for the third quarter of 2024, estimating it at around 9.10 trillion won ($7.6 billion). This figure marks a substantial increase of 274% compared to the previous year's profit of 2.43 trillion won. However, the company is facing challenges due to one-time costs and increased competition from Chinese memory manufacturers, which have led to inventory adjustments among mobile customers. The memory business, crucial for devices like laptops and servers, has been particularly affected by these market dynamics. Samsung, a leading manufacturer of memory chips, has also reported delays in shipments of its fifth-generation high bandwidth memory chips, known as HBM3E, which were recently approved by Nvidia for use in AI processors. These delays are significant as they impact Samsung's ability to meet demand from major customers, potentially affecting its market position. The company’s share price has already seen a decline of over 24% year-to-date, and following the earnings guidance announcement, it dropped an additional 0.7%. Overall, the combination of increased supply from competitors and operational challenges poses a risk to Samsung's profitability and market share in the highly competitive semiconductor industry.