[News Today] SAMSUNG CHIPS SEE LOW PROFIT

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Samsung Electronics released its third-quarter earnings, and semiconductors played quite a bit of a role in its reports. The division, losing its lead in high bandwidth memory HBM, posted an operating profit of around 3 trillion won, missing market expectations.

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Samsung Electronics' third quarter sales stood at 7.9 trillion won, roughly 57.4 billion U.S. dollars.

Sales increased nearly 7%, setting a record quarterly high.

The tech giant's sales growth was driven by increase in signature product sales and unit prices.

However, Samsung's operating profit fell 12% from the second quarter, mainly due to the company's underperforming semiconductor business.

Kim Jae-joon/ Strategic Marketing Dir., Samsung Electronics
Our performance decreased due to reversal of inventory valuation loss compared to the previous quarter, one-time charge such as incentive provisioning and currency effect due to a weak dollar.

Unlike the struggling system and foundry sectors, the memory business saw a 112% on-year spike, driven by the demands from sectors including artificial intelligence and thus became the only semiconductor business that outperformed projections.

The market was relieved by the fact that the nation's premier chipmaker avoided seeing dipping figures, but the semiconductor sector's operating profit rate which plunged more than 9 percentage points from the second quarter is a cause for concern.

For the third quarter alone, Samsung's operating profit rate was merely one-third that of its rival SK Hynix.
High bandwidth memory or HBM was the difference maker.

Kyung Hee-kwon/ Research Fellow, KIET
Sales of high-value products in memory business helped sustain Samsung's performance, but Hynix is widening the gap with more lucrative HBM products.

Samsung Electronics announced that it would cut down on the production of existing products and rush the conversion to high-capacity, high-specification items.

In the end, Samsung's performance is likely to be determined by its chances of supplying to industry bigwig Nvidia.
Samsung Electronics projected that fifth-generation HBM sales would account for as much as 50% of sales in the fourth quarter.