Samsung vows to boost AI chip sales after earnings miss

Chip giant hints at imminent shipments for Nvidia, possible tie-up with foundry rival TSMC

Samsung Electronics headquarters in Seoul (Yonhap)

Samsung Electronics said Thursday it will focus on producing high-value chips and is ready to supply the cutting-edge AI chips high in demand after announcing disappointing quarterly earnings.

The company also hinted it is making strides to supply its cutting-edge HBM3E chips to Nvidia, which controls some 80 percent of the world's AI chips, and said it aims to mass produce the next HBM4 in the second half of next year.

“There was a delay in commercializing HBM3E chips, but we have made meaningful progress by passing an important stage in the chip qualification test process with our major customer," Kim Jae-june, executive vice president in charge of the memory chip business, said in the earnings call for the July-September period.

"The company expects to expand sales of HBM3E in the fourth quarter this year, and the product is expected to take about 50 percent of the total HBM sales in the last quarter."

Even though the vice president did not reveal the customer, Nvidia is widely seen as the key client of the advanced AI chips.

The renewed push for AI chips comes after Samsung reported an operating profit of 9.2 trillion won ($6.66 billion) in the July-September period, which came far below market expectations, hovering at 10 trillion won.

Samsung's chip division alone posted sales of 29.2 trillion won, and an operating profit of 3.9 trillion won in the third quarter. The company attributed the weak earnings to one-off expenses such as the provision of incentives worth over 1.2 trillion won, and currency effects due to a weak dollar.

In efforts to ramp up its footing in the HBM market where its crosstown rival SK hynix is the leading player, Samsung said it could team up with TSMC, its foundry rival, to offer more tailored chips to customers.

"For custom HBM chips, it is crucial to meet the requirements of the customers. So we plan to respond flexibly in selecting foundry partners for base die manufacturing, prioritizing customer needs," Kim said.

Industry sources say Samsung, a distant No. 2 in foundry, still struggles to elevate the yield rate to compete head-on with TSMC, the dominant market leader. Kim indicated that Samsung could remain a memory provider while relying on TSMC for chip packaging to better meet specific customer demands.

The chip giant said it is additionally preparing to introduce an improved line of its HBM3E product, "to meet the demands of major customers for their next-generation GPU projects."

"We are currently arranging time with our clients to discuss mass production of the enhanced version (of the HBM3E) to launch in the first half of next year," Kim said.

The company explained its plans to reduce the share of older-generation DDR4 and LPDDR4 products, which face strong competition in the market, while expanding the share of high-yield products such as DDR5 modules for servers with a capacity of 128 gigabytes or higher and LPDDR5X.

On the smartphone front, the company plans to introduce a more affordable foldable line, and a new form factor phone. The company is reportedly working on multiple fold and rollable smartphones.

The mobile device division achieved sales of 2.99 trillion won during the July period, which is 13 percent higher than the earlier quarter and up 3 percent on year. But the division witnessed its operating profit drop to 2.8 trillion won from last year’s 3.3 trillion won. In the third quarter, the company shipped 57 million units of smartphones and 7 million units of tablet devices.

“In 2025, we anticipate seeing an increase in the prices of major components due to improved product specifications, as we strengthen product competitiveness,” Daniel Araujo, vice president in charge of the mobile device division said.

“However, we aim to improve profitability by further enhancing Galaxy AI as well as expanding sales centered on flagship products.”

By Jo He-rim(herim@heraldcorp.com)