Samsung’s Q3 Profit Soars 274%, But Falls Short of Expectations—Company Apologizes for AI Chip Setback

Samsung Electronics reported a nearly four-fold increase in its operating profit for the third quarter, but the results missed analysts’ expectations. The company estimated its preliminary operating profit at about 9.1 trillion won ($6.8 billion) for the quarter ending September 30, falling short of the forecast of 10.3 trillion won.

While this represents a significant improvement of 274% from 2.43 trillion won in the same period last year, it marks a decline from the 10.44 trillion won profit recorded in the previous quarter. Samsung’s estimated revenue for Q3 was 79 trillion won, also below market expectations of 81.57 trillion won, according to Reuters.

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Samsung, known as the world’s largest manufacturer of memory chips, smartphones, and TVs, will release a complete financial statement later this month, which will include net income and a breakdown of its divisions.

In response to the disappointing results, Young Hyun Jun, Vice Chairman of Samsung’s Device Solutions Division, acknowledged that the company is lagging behind competitors in the growing AI chip market and issued a rare apology. He stated that the company would review its organizational culture and processes to improve its long-term competitiveness, rather than relying on short-term fixes.

Jun mentioned, “We have caused concerns about our technical competitiveness, with some talking about the crisis facing Samsung. As leaders of the business, we take full responsibility for this.” He promised to turn this challenge into an opportunity and focus on enhancing the company’s technological competitiveness in the long run.

Samsung also noted that earnings in its memory chip division declined due to increased supplies from Chinese competitors and adjustments made by some mobile customers to their inventories. Despite solid demand for high-bandwidth memory (HBM) and other chips used in servers, these factors negatively impacted profits.

So far this year, Samsung’s share price has dropped by more than 20%, and it fell by 1.4% following the earnings announcement.