Samsung’s Q3 profit rises but chips remain sluggish

Samsung Electronics has reported a third quarterly operating profit of 3.86 trillion won (USD 2.8 billion) from its semiconductor business, short of the 4 trillion won expected by analysts.

The company attributed this to the one-off costs in its chip-making Device Solutions (DS) division. 

It reported net income of 9.78 trillion won (USD 7.1 billion) in the September quarter, compared with analysts’ average estimate of 9.14 trillion won. 

Revenue grew 17.35% year-on-year but operating profit slipped below the 10 trillion won mark three months after South Korea’s largest company had reported a second quarter profit of 10.44 trillion won.  

The lukewarm performance was mainly due to sluggish growth in the DS division, which posted 29.27 trillion won in revenue and 3.86 trillion won in operating profit.  

“Compared to the previous quarter, the revenue from HBM grew by 70 percent, and we are now mass-producing and selling 8-layer and 12-layer HBM3e chips,” said Kim Jae-joon, executive vice president of Samsung’s DS division.  

Kim said Samsung achieved “significant progress by completing a key stage in quality testing with a major client,” and it expects “an expansion in sales in the fourth quarter of this year.”

Samsung has been struggling to expand its HBM3e supply to Nvidia, with some reports indicating setbacks in passing quality tests for Nvidia’s AI processors.  

The company’s Device Experience (DX) division, which includes mobile phones and consumer electronics, posted 44.99 trillion won in sales and 3.37 trillion won in operating profit in the third quarter.  

“For the fourth quarter, the demand trends experienced in the previous quarter are expected to continue,” Samsung said in a media release. “The company plans to accelerate the conversion of cutting-edge nodes in legacy lines and aims to strengthen its business fundamentals by completing the normalization of the inventory level and mix by the end of the year.”