Samsung profit drop in the AI chip race
Samsung profit drop in the AI chip race
A few years ago, Samsung Electronics was still the leading player in the global semiconductor market, dominated an area of chips and adapted to the competition with Taiwan's TSMC in another. But the latest setbacks, including the missed chance to react early on to the boom of artificial intelligence (AI), have led to experts say that the company has been booted and are now fighting with a loss of market share.declining quarterly figures
In the second quarter, Samsung's operational profit fell by 55 % to 4.7 trillion Won ($ 3.4 billion), compared to 10.4 trillion WON ($ 7.5 billion) in the previous year. However, there was a slight increase in sales compared to the same period of the previous year. The operational profit in the chip division, which was historically a cash cow and used to make two thirds of the total profit, shrank by almost 94 % between April and June compared to the previous year.
On Tuesday, the Samsung shares in Korea fell to this news by almost 2 %, but later recovered. The company led the less than expected development to adaptations of the warehouse in his contract business with semiconductors and the persistent effects of US export controls for advanced AI chips back to China-an important market for Samsung.
The future of Samsung in danger
The disappointing annual report on Thursday again raises concerns about the future of the stricken South Korean technology giants. Samsung already warned the investors in his profit forecast at the beginning of the month about the dark development. The results follow a contract worth $ 16.5 billion with Tesla, which was announced this week to produce new chips-a step that is intended to improve the prospects of Samsung.
For the second half of the year, Samsung plans to actively react to the growing demand for high-quality and AI-controlled products and to further increase competitiveness in the area of advanced semiconductors.
How Samsung lost his competitiveness
The largest mixed group of South Korea has had significant difficulties in both important sales flows in recent years: the production of memory chips that store data and logic chips that enable data processing and calculation. As a leading manufacturer of memory chips, Samsung has lost market shares in rivals such as SK Hynix and Micron Technology, especially in the rapidly growing market for High Bandwidth Memory (HBM). HBM, which consists of stacked dram chips (Dynamic Random Access Memory), is used for short-term data storage and is crucial for AI processors from companies such as Nvidia and AMD.
Samsung also falls behind the industry leader TSMC in the area of logic hauler, both with regard to top technologies and the market share. In the first quarter of this year, SK Hynix Samsung overtaken and took over the Ahead of logic chips with a market share of 68 %, compared to only 8 % for Samsung, according to the market research company Trendforce.
error in the corporate strategy
Sanjeev Rana, head of Korea research at CLSA, a broker company, said that a number of "miscedents" on the part of Samsung-in particular the failure of management to prompt the increase in AI demand-contributed to the current difficulties. "They were too slow to recognize the upcoming AI revolution and relied on other products and technologies that were not the best decisions afterwards," he said, adding that Samsung initially overlooked the potential of HBM.
As a result, Samsung has previously missed the supplier of Nvidia's most advanced HBM product, which made almost 80 % of global HBM demand last year. This product has repeatedly not passed exams by Nvidia, although it expects the company to pass it in the next two months.Although Samsung announced in June to have secured orders from AMD and Broadcom, competitors SK Hynix and Micron have already started to deliver advanced memory chips to customers.
The role of Tesla for Samsung's comeback
This week Tesla Samsung offered a leash. CEO Elon Musk announced that the electric vehicle company , new chips for self-driving cars and Humanoid robot to produce comprehensive deals.
"The huge new factory of Samsung in Texas will be devoted to the production of the next Ki6 chips for Tesla," he said in a post on x . "Samsung has agreed to support Tesla in maximizing the efficiency of production. This is a crucial point, because I will personally pay attention to progress."
The Samsung shares rose by more than 6.9 % due to the news and thus reached the highest level since September. Tesla currently receives his Ki4 chips, which drive their advanced driver assistance systems (Full Self-Driving, FSD), from Samsung, but commissioned TSMC to produce his Ki5 chips, according to Musk.
The deal came after Samsung had postponed the operational start of his Chipfabriken in Taylor, Texas, from 2024 to 2026 because it had difficulty winning customers for the project. Ray Wang, Research Director with a focus on the semiconductor industry at Futurum Group, described the deal with Tesla as "significant" and explained that he could increase the weak profitability of Samsung and validate its ability to manufacture advanced chips.
The agreement will also help increase the work of the works in Texas and to improve the company's return on capital, he added. Rana said that mass production for the Tesla project will only begin in 2027, but the deal will boost market development and represents a "great sign of trust". He explained: "Management has restructured a lot in this business division in the last 12-15 months, so I think they now understand where the problems were and have made efforts to solve them. Things will improve in the second half of the year."
Kommentare (0)