Samsung has addressed consumers and investors about the firm's disappointing performance in the AI markets, especially its "failure" in the HBM segment.
Samsung Attributes Delayed Entry In The AI Markets & Increasing Competition In The HBM Segment As Primary Reasons Behind Weak Earnings
The Korean giant is having a tough time when it comes to securing the major industry players, such as the likes of NVIDIA, due to which Samsung has revealed that their Q3 2024 earning guidance would come in below market expectations. While there are several factors accounting for the reason behind this "economic downfall", Samsung's late entry into the AI markets, coupled with growing competition from the likes of SK hynix and TSMC, has pushed back the Korean giant, which they have admitted in a post addressing the general public.
To our customers, investors, and employees who have always loved Samsung Electronics,
Today, we, the management of Samsung Electronics, would like to first apologize to you.
The performance that fell short of market expectations has raised concerns about the fundamental technological competitiveness and the future of the company. Many people are talking about Samsung's crisis. All of this responsibility lies with us who are leading the business.
Dear customers, investors and employees,
I am confident that if we challenge ourselves fiercely, we can definitely turn the current crisis into a new opportunity. I ask for your support and encouragement so that Samsung Electronics can once again demonstrate its strength.
Thank You
Samsung Electronics DS Division Vice Chairman Jeon Young-hyun via Samsung Newsroom
Samsung says that they failed to secure a significant AI "anonymous" customer (via Reuters). While they didn't give us any names, the leading candidate is none other than NVIDIA, given the track record of developments we witnessed with NVIDIA and Samsung collaborating for an HBM partnership.
The Korean giant hasn't explicitly confirmed this, but based on what the firm claims, it looks like NVIDIA has pushed Samsung off the list. Samsung says the supply of high-end HBM3E AI chips has been delayed, putting them far behind the competition.
Not only this, but Samsung claims that the supply of traditional semiconductors from Chinese firms has hindered the company's business. Currently, the production capacity of China's semiconductor industry has grown massively, which has attracted companies looking to acquire lower-margin chips but in higher quantities. So, Samsung has seen a hit in this segment as well, which is why the firm's foundry business has been hit massively.
However, Samsung isn't expecting to undergo "radical" changes. In a recent statement by Chairperson Jay Y. Lee, the Korean firm won't spin off the foundry business but will continue to be indulged in the race. Right now, Samsung is faced with severe issues, including ineffective 3nm yields and troubles in the production of next-gen processes. Hence, the foundry division isn't really in the best of position for now.
Samsung needs to pick up the pace if it wants to be consistent in the markets. The immense competition from the likes of TSMC is making it hard for the Korean giant to sustain itself in this situation.
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