Samsung Electronics predicted a 10% drop in Q3 2024 profits compared to initial estimates. An unexpected delay in an AI chip deal with an unidentified major client is the primary cause, although the company offered no further details.
Despite this setback, Samsung’s mobile division saw a boost in earnings from the previous quarter, coinciding with the Galaxy Z Fold 6 and Galaxy Z Flip 6 foldable phones. Additionally, the display division benefited from Apple’s iPhone releases, many of which feature Samsung-made panels.
Several analysts, as cited by Reuters, anticipate that Samsung’s earnings will remain stagnant in the current quarter. The company continues to trail SK Hynix, which is experiencing growth in sales of HBM chips, a key component for AI processing.
Samsung’s delayed entry into the AI chip market has forced it to rely on traditional, lower-margin chips. This market is facing increasing competition from Chinese manufacturers as demand softens.
Vice Chairman of Samsung’s Device Solutions Division, Young Hyun Jun, acknowledged the company’s current challenges, stating, “These are testing times for the company.” Jun expressed determination to transform these difficulties into opportunities, pledging to bolster Samsung’s long-term technological competitiveness.
Samsung’s mobile division has been the saving grace for the company’s finances lately. The latest Galaxy S series phones have been popular among fans ever since their release at the start of the year with stronger sales than the Galaxy S23 as well as the Galaxy S22. The Galaxy S23 also showed a solid performance compared to its predecessor.
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