Samsung electronics officially apologizes for crisis amid disappointing profit despite AI boom. While the business struggles to capitalize on high demand for the processors used in artificial intelligence servers, Samsung said it projected third-quarter profits to rise to 9.1 trillion won ($6.8 billion), up 274.5% from a year earlier. However, the earnings forecast fell short of market expectations.
“Today, we, the management of Samsung Electronics, would like to first say sorry to you,” Samsung said in a statement signed by Jun Young-hyun, the vice chairman of its device solutions division.
It said, “Concerns have arisen about our fundamental technological competitiveness and the future of the company” because of the results.
“Our management will take the lead in overcoming the crisis… We will make the serious situation we are currently facing an opportunity for a resurgence.”
While the results are down almost 13% from the previous quarter, they are up approximately three times from the same period last year. Samsung apologizes, about a week after the internet giant announced plans to cut staff in some of its Asian businesses, citing “routine workforce adjustments”.
Bloomberg announced that the layoffs could affect roughly 10% of the workforce in such markets, while some reports suggested the proposed shift might affect up to 30% of overseas staff at some locations.
Samsung has been lagging behind South Korea’s SK Hynix when it comes to high-bandwidth memory (HBM) chips used in AI chipsets, which could be one of the biggest causes of the profit estimate released on Tuesday, said Kim Dae-jong at Sejong University in Seoul.
According to Kim, “Given the circumstances, it appears that Samsung has also lost a sizable number of HBM-related employees to SK Hynix.”
In addition, he said that the company was in a “grave situation.” In the afternoon trading in Seoul, Samsung’s shares dropped 1.31%. And because of this, the company’s stock shot down by 30% over the previous six months.
Samsung gave out a statement in which the company said management would “quickly assess and make any necessary adjustments to our workplace culture.”
The company is the flagship division of the massive South Korean conglomerate Samsung Group, which is by far the biggest of the “chaebol,” or family-controlled conglomerates, that govern the corporate landscape in the fourth-largest economy in Asia.
According to Jene Park, a senior analyst at Counterpoint Research, there has been “an expected decline” in Samsung’s memory market due to general declines in memory demand and delays in the supply of the newest chips.
Nevertheless, he added it was doubtful that profits or sales would drop much anytime soon. Park gave a statement in which he said, Samsung “plays a significant role in the global supply chain.” According to the prediction of the company, sales for the third quarter will reach 79 trillion won, an increase of 17.2% year over year.
At the end of this month, Samsung is anticipated to deliver its final earnings report.
