Samsung Foundry has witnessed a massive blow, as the division reports a whopping 40% QoQ decline in profitability, creating massive troubles for the Korean giant.
Samsung's DS Division Reports Dwindling Economic Conditions, Yet Future Ambitions Indicate A "Comeback"
Samsung's financial troubles aren't finishing just yet, as after reporting a massive strike to its HBM business, the Korean giant is now facing dwindling economic conditions with its semiconductor division, as the firm's Q3 2024 earnings report reveals that Samsung's DS department has reported quarterly operating profits at KRW 3.86 trillion, coming in less than the expected KRW 4.2 trillion. The main culprit in low profitability rates is associated with the slack in the HBM business, following the announcement that Samsung has unable to secure NVIDIA and other AI tech giants as customers for their HBM portfolio.
Interestingly, Samsung's overall YoY revenue growth is still at 17.35%, reaching up to KRW 79.1 trillion, but with the semiconductor business lagging, the earnings reports haven't created much of a positive impact on the markets. For those unaware, Samsung's HBM business hasn't managed to held up against competitors, notably SK hynix, as despite going through a thorough "HBM sampling" process with NVIDIA, the Korean giant was unable to secure Team Green as a customer, after which, the business has been witnessing an overall downfall.
However, with Samsung's HBM ambitions, the Korean giant has revealed profound achievements, that might prove to be a turn around for the company. Samsung has revealed that HBM3E is expected to be in mass-production by this quarter, and it will account for more than 50% of the total HBM sales in Q4 alone. Apart from this, Samsung says that the company is expected to supply to NVIDIA by Q4, but it has admitted to the delay, citing qualification inconsistencies. And, HBM4 is slated for H2-2025, so things are looking quite positive for now.
Samsung has shown massive optimism with the foundry business, moving into the future, since the firm claims that they have seen breakthroughs with its "cutting-edge" nodes, specifically with the 2nm GAA, as Samsung has now pushed out "SDK kits" for potential customers to integrate the technology into their product designs, and is expected to shift towards mass-production by FY 2025. Samsung's 2nm is still being faced with yield rate complications, which has hindered the adoption of the process, but by the looks of it, the Korean giant still has hope with sub-2nm technologies.
The Korean giant isn't in its best of position for now, but the Q3 2024 earnings clearly show that Samsung has huge ambitions for the future, and given that the firm executes its plan accordingly, it might be in for an economic upturn moving into Q4, and FY 2025.
About the author: Muhammad Zuhair is a hardware and technology reporter for Wccftech, specializing in the semiconductor industry and the complex interplay between technology, manufacturing, and geopolitics. His coverage focuses on the corporate strategies and technological roadmaps of industry giants like TSMC, NVIDIA, Samsung, and Intel. Zuhair's expertise lies in deconstructing complex topics such as fabrication nodes (e.g., 2nm process), the economic impact of policies like the CHIPS Act, and the strategic development of AI infrastructure from NVIDIA, AMD and Intel.
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