Advertisement here

Samsung Electronics Faces “Crisis” as Stock Plummets Following Lackluster Q3 Earnings.


Seoul: Samsung Electronics Co., amidst an adverse market climate and underwhelming third-quarter earnings, is crafting new strategies to stimulate a recovery by early 2025, analysts stated on Tuesday. The global leader in memory chip production reported a preliminary operating profit of 9.1 trillion won (approximately US$6.8 billion) for the third quarter, falling short of market anticipations that exceeded 10 trillion won.

According to Yonhap News Agency, Samsung’s operating profit has more than tripled compared to the same period last year, yet it declined by 12.8 percent from the previous quarter. This disappointing earnings guidance has led to a significant decrease in Samsung Electronics’ stock, which has plummeted 30 percent over the past six months. The downturn was primarily driven by foreign investors, who have been net sellers of Samsung shares for 33 consecutive trading days, from September 3 to the preceding Friday, offloading a net total of 12.5 trillion won.

During this period, Samsung’s stock
price dropped 24.9 percent, decreasing from 74,400 won to 55,900 won, and its market capitalization shrank from 444.2 trillion won to 333.7 trillion won. In light of these challenges, Samsung issued an unusual public apology to its stakeholders, acknowledging the situation as a “crisis.” Vice Chairman Jun Young-hyun, who assumed control of the semiconductor division in May, expressed regret, stating, “The leadership team at Samsung Electronics wishes to apologize for not meeting your expectations with our performance.”

Analysts have pinpointed Samsung’s recent struggles to diminished demand in the memory market and a lag in competitiveness within the high-bandwidth memory (HBM) segment, which is crucial for AI applications. A Macquarie report cautioned that Samsung might lose its dominance in the memory market due to a potential DRAM oversupply amid slowing demand for mobile and PC chips. Additionally, Samsung has encountered hurdles in the HBM market, where SK hynix currently leads with its advanced 5th gen
eration HBM3E chips. Reports suggest that Samsung did not meet Nvidia’s qualification tests for supplying these sophisticated AI chips, whereas SK hynix commenced mass production of 12-layer HBM3E chips in September.

Despite the challenges, some analysts foresee a potential turnaround for Samsung in the first half of the next year, as the memory market bottoms out and demand picks up. Ryu Young-ho, an analyst at NH Investment and Securities Co., noted, “The memory market typically bottoms out in the first quarter and rebounds in the second. We anticipate a recovery as demand and prices increase.” Samsung’s development of next-generation HBM4, expected to begin production in the first half of 2025, is also regarded as a potential pivotal move.

In pursuit of recovery, Samsung has recently formed a dedicated HBM development team to bridge the gap with SK hynix and recapture its competitive advantage in the AI chip sector. As part of its revival strategy, Samsung is planning a significant executive reshuffle by
year-end to chart a new strategic direction. A Samsung official, who wished to remain anonymous, stated, “The reshuffle will signal our commitment to lead with industry-advancing technology. We believe favorable market conditions, including inventory adjustments and stronger demand, will align with our new technologies to create momentum for growth.”

Samsung Electronics is set to release its detailed third-quarter earnings report on Thursday.