Samsung apologizes for "only" 6.2 billion euros operating profit
Samsung's semiconductor division is doing much better than it was in 2023. Nevertheless, the boss feels compelled to apologize.
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Samsung decided to take a drastic step even before announcing its latest business figures: The company voluntarily published a sales warning for the past third quarter and attributed a crisis to itself.
The reason: Samsung expects sales of around 78-80 trillion won and an operating profit of 9–9.2 trillion won before tax. At the current exchange rate, this would correspond to just under 54 billion or 6.2 billion euros. A public letter states (mechanically translated from Korean):
"Dear customers, investors and employees who have always loved Samsung Electronics, today we, the management of Samsung Electronics, would like to sincerely apologize to you. Our performance has fallen short of market expectations, leading to concerns about our fundamental technological competitiveness and the future of the company. Many of you have spoken of a crisis at Samsung. The responsibility for this lies with those of us who run the company."
The letter appeared signed by Young Hyun Jun, head of Samsung Device Solutions (DS) – Samsung's semiconductor division, which he only took over in May 2024.
Analysts expected an operating profit of just over 10 trillion won, or just under 7 billion euros. The difference is not even 800 million euros.
Strong annual growth is obviously not enough
The announced figures already represent enormous growth compared to the previous year. In the third quarter of 2023, Samsung turned over "only" a good 47 billion euros at the exchange rate at the time, with an operating profit of 1.7 billion euros. Compared to the second quarter of 2024, revenue increased by 7 percent; operating profit fell by 12 percent.
In 2023, the so-called hog cycle hit all memory manufacturers – especially Samsung as the global market leader for DRAM and NAND flash chips. Production was ramped up due to high demand during the coronavirus pandemic, but demand then collapsed due to the economic downturn. As a result, memory production turned into a billion-dollar loss in 2023. Prices have since stabilized; manufacturers are making a profit again.
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Delay in HBM3e deliveries
The news agency Reuters has received a further statement according to which an unnamed major customer has delayed orders for high-bandwidth memory (HBM3e). Such DRAM components are currently primarily used in AI accelerators and potentially generate billions in sales for Samsung.
In recent months, rumors have circulated that Samsung had to make and validate adjustments to HBM3e for Nvidia. AMD is also said to buy HBM3e from Samsung for its Instinct accelerators such as the MI325X.
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