Samsung reports ‘major’ progress in the supply agreement for AI chips

SEOUL – Samsung Electronics on Thursday reported progress on a major supply deal for artificial intelligence-focused chips, aiming to reassure investors after a slowdown in semiconductor profits last quarter.

The South Korean tech giant said its operating profit for the July-September period rose more than 277% from a year earlier to 9.18 trillion won ($6.65 billion). But this figure represented a 12% decline from the second quarter, which Samsung attributed largely to one-time costs, such as providing incentives for employees in its computer chip business, and the effects of a weaker US dollar.

Samsung’s semiconductor division posted an operating profit of 3.86 trillion won ($2.8 billion) this quarter, a recovery from a deficit in 2023 but a sharp decline from the 6.45 trillion won ($4.67 billion) it reported in the period April-June.

Although Samsung saw solid demand for AI and server chips last quarter, its mobile chip business weakened as some customers adjusted inventories. The market was also affected by increased supply of older memory products by Chinese manufacturers, the company said in a statement.

More importantly, Samsung lagged behind key competitors such as SK Hynix with HBM3E, the latest generation of high-bandwidth memory chips used to power AI applications.

During a conference call, Samsung Executive Vice President Jaejune Kim said the company recently took a “meaningful step forward” in a qualification testing process to supply its HBM3E products to an unspecified “major customer,” a development that could potentially boost sales in the coming years. fourth quarter. Kim’s comments raised speculation that Samsung would strike a supply deal with Nvidia, a major US manufacturer that designs advanced chips that power AI.

“In the fourth quarter, mobile and PC memory demand may be weak, but AI growth will keep demand at robust levels. Against this backdrop, the company will focus on driving sales of high-bandwidth memory and high-density products,” Samsung said.