Samsung Electronics missed chip profit estimates in its fourth quarter, falling short of market expectations of 3 trillion won (£1.68bn) as competition heightened and demand plateaued.
In Friday’s report, Samsung Electronics announced a 22 per cent year over year increase in net profit for its fourth quarter, reaching 7.754tr won (£4.65bn).
However, this represented a 23 per cent decline from the previous quarter.
The firm cited sluggish demand for conventional memory chips, as well as intensified competition in the market for its decline.
Samsung also acknowledged delays in advancing its high bandwidth memory (HBM) technology, which impacted its competitiveness in the AI chip market.
“There will be some temporary restrictions in our HBM chip sales in the first quarter,” said Kim Jae-june, executive vice president of Samsung’s memory business to Reuters.
“We expect some impact on our HBM demand from not just U.S. restrictions on exports of high-end chips but also a shift in demand for improved chips by major clients,” he said.
The firm has also warned that sales of its AI chips will be sluggish due to its US export restrictions to China.
The electronics giant also attributed the downturn to weakened profitability in its core semiconductor business.
The semiconductor division’s operating profit declined by approximately 2.9tr won (£1.74bn), down from 3.9 won (£2.34bn) in the previous quarter and 6.5tr won in the second.
Competitors like SK Hynix have taken the lead in this sector, beginning mass-producing its HMB products last year, while Samsung was still undergoing testing with major clients like Nvidia.
In its mobile division, Samsung’s operating profit fell by 25 per cent from the previous quarter due to increased competition and the diminishing impact of its recently launched products.
Profit at the television division also dropped by 60 per cent.
Looking ahead, the world’s largest chip maker expects overall earnings improvement to be limited in the first quarter of 2025 as challenges in the semiconductor sector continue.
Yet, the company said the launch of various new products, such as the latest Galaxy phone series could help its mobile arm.
It has also projected a recovery in the memory market in the second quarter.