By Abigail Philip David
Samsung Electronics issued a rare public apology on Tuesday, acknowledging it is facing a “crisis” in its technological competitiveness following lower-than-expected profit forecasts, despite a global boom in artificial intelligence (AI).
The company projected a third-quarter profit of 9.1 trillion won ($6.8 billion), marking a 274.5% increase from the previous year but falling short of market expectations. The shortfall comes as Samsung struggles to capitalize on the surging demand for AI server chips.
“Today, we, the management of Samsung Electronics, would like to first say sorry to you,” the company said in a statement signed by Jun Young-hyun, vice chairman of its device solutions division. The statement highlighted concerns over Samsung’s “fundamental technological competitiveness” and the company’s future amid the disappointing results.
Samsung’s profits for the period are up nearly threefold compared to last year but down by 13% from the previous quarter. The company vowed to turn the current challenges into an “opportunity for a resurgence.”
This apology comes shortly after Samsung announced plans to reduce staff in some Asian operations, which the company described as “routine workforce adjustments.” Reports suggest that these layoffs could impact up to 10-30% of overseas employees in affected regions.
Industry experts have noted that Samsung has been trailing its competitor, South Korea’s SK Hynix, in the production of high-bandwidth memory (HBM) chips used in AI chipsets. According to Kim Dae-jong of Sejong University, this may be one of the key reasons behind Samsung’s underwhelming profit guidance. He also noted that Samsung had likely lost a significant number of HBM-related employees to SK Hynix.
Shares in Samsung dropped 1.31% in afternoon trading in Seoul, with the stock down nearly 30% over the past six months.
Despite the current challenges, some analysts remain cautiously optimistic. Jene Park, a senior analyst at Counterpoint Research, said the decline in Samsung’s memory sector was expected due to delays in supplying new chips and a general slowdown in memory demand. However, Park does not foresee a significant drop in profits or sales in the immediate future, given Samsung’s crucial role in the global supply chain.
Samsung is expected to release its final earnings report by the end of the month, with estimated sales for the third quarter up 17.2% year-on-year, totaling 79 trillion won.
