Customers shop at a Samsung mobile phone store inside a mall in New Delhi.
Reuters | Aninditu Mukherjee
Samsung Electronics on Thursday reported third-quarter sales and operating profits slightly above its own expectations, but its chip business posted sharply lower profits than in the previous quarter.
The semiconductor unit reported third-quarter operating profit of 3.86 trillion won (about $2.8 billion), down 40% from the previous quarter.
While its memory chip unit benefited from strong demand for artificial intelligence and traditional server products, Samsung said that “inventory adjustments negatively impacted mobile phone demand.” The company said it is also facing “the growing supply of older products in China.”
Samsung is the largest manufacturer of memory chips used in devices such as laptops and servers, and is the second largest player in the smartphone market worldwide.
While artificial intelligence drove demand for advanced nodes from its foundry unit, Samsung said demand for mobile devices and PCs underperformed. The Korean tech giant said the recovery in demand for mobile phones and personal computers will be delayed, although interest in more advanced products will continue to grow, driven by artificial intelligence investments.
Here are Samsung's results compared to the guidance it issued earlier this month:
Revenue: 79.1 trillion won versus 79 trillion won Operating profit: 9.18 trillion won versus 9.1 trillion won
These guidance numbers were significantly lower than LSEG's estimate of 11.456 trillion won in operating profit. Samsung Vice Chairman Jeon Young-hyun, the new head of the company's hardware solutions division, issued a rare apology after issuing the directives.
Samsung expects that demand for these advanced chipsets will continue to enhance growth in the coming year. The company said it also expects demand for servers to remain strong as technology companies continue to make “strong investments.”
Samsung Electronics shares, listed on the South Korean Stock Exchange, have fallen by 24.71% so far this year.
