Samsung faces challenges despite profit surge, AI chip competition

Samsung’s profit is increasing, but the recovery growth rate is weakening. The third quarter ended on September 30, and market research reports started to surface. Reuters reported that Samsung’s profit will rise in Q3 YoY amid AI chip competition.

According to the report, Samsung could report a significant rise in quarterly profit, with an estimated operating profit of $7.67 billion (10.33 trillion won) in the third quarter compared to 2.43 trillion won a year earlier.

Reuters highlighted that Samsung’s recovery pace has slowed down. As demand for smartphone and PC chips weakens, the company’s profit share from the chip business impacted the overall growth leading to a decline in recovery.

SK Hynix and Micron are all-time challengers to Samsung Elec. However, the company is also getting intense pressure from Chinese competitors in commodity chips. DRAM business is also in threat due to late entry into the high-margin AI chip market.

“Samsung is more likely to lose the title of number 1 DRAM vendor in case of a softer commodity DRAM market,” Daniel Kim, an analyst at Macquarie Equity Research said in a recent note, referring to DRAM chips that are widely used in computers and smartphones.

Samsung Mobile:

MX Business could also report a decline in profits given lower-than-expected sales of flagship phones. The company’s new foldable phones aren’t selling as expected while the rising competition is also becoming a severe headache.