Samsung sees chip shortage worsening, but keeps investors in suspense on returns
SEOUL: Samsung Electronics said on Thursday it expects an artificial intelligence (AI)-driven memory chip shortage to deepen next year, after posting nearly a ninefold jump in quarterly profit on robust demand for AI chips.
Samsung Electronics anticipates a worsening shortage of artificial intelligence-driven memory chips next year, following a nearly ninefold increase in quarterly profit driven by robust demand for AI chips. However, the lack of clarity from the leading memory chipmaker regarding plans to return its AI earnings to shareholders, combined with slightly below expectations chip earnings, disappointed investors, prompting a more than six percent drop in its shares.
In contrast, SK Hynix, Samsung's rival, reported better-than-expected earnings on Wednesday and disclosed plans to return approximately $75 billion to shareholders this year, outperforming market expectations. Analyst Lee Min-hee from BNK Investment & Securities noted that while Samsung has maintained its previous guidance, SK Hynix's proactive measures have eased market concerns over potential waning momentum in AI-driven chip earnings.
Samsung projected that its memory business will see capital expenditure on AI infrastructure reach historic levels in 2027 as the AI ecosystem expands, surpassing industry supply by the end of 2026. The company reported a 107.4 trillion won operating profit for the July-to-September period, a 15-fold jump from the previous year, but this still fell short of analysts' estimate of 107.3 trillion won, according to LSEG.
While the semiconductor division's third-quarter profit surged 15-fold, it was still below expectations at 106.5 trillion won.
Samsung indicated that its chip division's capital spending would rise by 62 percent to 76.8 trillion won in 2024, with a sharp increase expected in the following year to address the supply shortage. Despite expectations of resilient demand for AI chips, concerns about financing for AI infrastructure and increased competition from China have pressured chip stocks in recent months.
Alphabet's parent company, Google, reported a significant increase in cash burn as it intensified AI development efforts. The rising memory chip costs have also impacted Samsung's mobile business, which turned a loss of 800 billion won due to higher chip costs.
Written by urgent.news from New Straits Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
