Samsung Electronics Issues an Apology to investors for Disappointing Results
Samsung Electronics Co. issued an apology to investors for disappointing results, admitting that the once-dominant memory chip giant is grappling with a potential crisis after losing its way.
Jun Young-hyun, newly appointed head of the core semiconductor business, promised to overhaul the organization in an unusually frank statement issued after Samsung disclosed worse-than-projected revenue and profit. In another filing, Korea’s largest company confessed to delays in delivering a key type of chip used with Nvidia Corp. processors for training AI — allowing SK Hynix Inc. to dominate the so-called high-bandwidth memory arena.
Apart from lagging SK Hynix in HBM, it’s also shown little progress against Taiwan Semiconductor Manufacturing Co. in the outsourced production of custom-made chips. Samsung warned about “inventory adjustments” by unspecified customers, as well as increasing competition from a legacy or less-advanced Chinese memory chipmaker. Its shares slid as much as 1.8% Tuesday, on track for their lowest close since March 2023. That takes their overall loss to more than 20% this year.
“These are testing times,” Jun said in his statement, adding that the leadership took full responsibility for Samsung’s plight. “We have caused concerns about our technical competitiveness, with some talking about the crisis facing Samsung.”
That underperformance is particularly painful given its longstanding market leadership and the boom in spending on AI hardware, which has buoyed Hynix as well as Micron Technology Inc. The largest US maker of memory chips reported last month that demand for AI gear will help boost revenue more than projected.
Samsung must now review its organizational culture and processes, Jun said — echoing previous comments about the need for fundamental change at one of Korea’s oldest companies. It’s begun laying off workers in Southeast Asia, Australia and New Zealand as part of a plan to reduce global headcount by thousands of jobs, Bloomberg News reported last week.
On Tuesday, the company reported a less-than-projected rise in preliminary operating profit to around 9.1 trillion won ($6.8 billion) in the September quarter, hurt in part by one-time performance bonuses. Revenue also gained less-than-expected to 79 trillion won. Samsung will provide a fuller financial statement with net income and divisional breakdowns on Oct 31.
Bloomberg also posted a video discussing the Samsung statement and more. For more, read the full Bloomberg report.