Samsung apologizes for financial woes and missed AI opportunity
What's the story
In an unusual move, Samsung Electronics, the world's largest memory chip maker, has apologized to its investors after posting disappointing financial results.
The company's newly appointed semiconductor division chief, Jun Young-hyun, took the blame for the challenges.
He admitted that Samsung is staring at a potential crisis due to underperformance and delays in critical chip deliveries.
Market challenges
Samsung's struggles in the semiconductor market
Samsung's woes are highlighted by lower-than-expected revenue and profit numbers.
The preliminary operating profit of KRW 9.1 trillion ($6.8 billion) for the September quarter was below expectations, partly due to performance bonuses. Revenue also missed forecasts at KRW 79 trillion.
The company has also been late in supplying a crucial chip used with NVIDIA processors for AI training.
This has given a leg up to competitor SK Hynix Inc. in the high-bandwidth memory (HBM) market, adding to Samsung's troubles.
Stock performance
Samsung's stock hits lowest point since March 2023
Apart from lagging behind SK Hynix, Samsung has also failed to match Taiwan Semiconductor Manufacturing Co. (TSMC) in outsourced chip production.
The company's shares fell as much as 1.8% on Tuesday, hitting their lowest since March 2023.
This year alone, the stock has plummeted over 20%.
Investors now await Samsung's full financial report, expected to be released on October 31.
Accountability
Samsung's leadership acknowledges responsibility for current difficulties
"These are testing times," Jun said, adding that Samsung's leadership is fully accountable for the company's current difficulties.
"We have caused concerns about our technical competitiveness, with some talking about the crisis facing Samsung."
He said the need for fundamental changes at Samsung and confirmed that the company has begun laying off workers in Southeast Asia, Australia, and New Zealand as part of plans to cut thousands of jobs globally.
Future strategy
Samsung's future plans and ongoing challenges
Now, Samsung is eyeing certification for its advanced HBM3E chips, something that was anticipated last quarter.
The delay has dragged Samsung's stock, which has lagged behind other AI-related stocks and the benchmark Kospi index.
Recently, analysts have also trimmed their price targets for the company.
Macquarie, in a report on September 25, downgraded Samsung from "outperform" to "neutral" and cut its target price from KRW 125,000 to KRW 64,000.