SEOUL: Samsung Electronics issued a rare apology and acknowledged on Tuesday ( Oct 8 ) that it was facing a” crisis” over its technological competitiveness, reflected in a disappointing profit guidance, despite a global AI boom.
Samsung reported a third-quarter profit increase of 9.1 trillion won ( US$ 6.8 billion ), up 227.5 % from the same period last year, but it fell short of market expectations as a result of the company’s struggle to leverage strong demand for the chips used in artificial intelligence servers.
” Now, we, the administration of Samsung Electronics, would like to initially state sorry to you”, Samsung said in a statement signed by Jun Young-hyun, the vice president of its system answers section.
Because of the benefits, problems have arisen about our fundamental scientific profitability and the future of the company.
” Our management may take the lead in overcoming the issue… We may make the critical situation we are now in an option for a comeback.”
The results are up nearly three times as much as they were during the same time last year, but they are only down almost one-third from the same quarter last month.
The software giant announced about a month prior to the release of the ominous explanation, referring to the shift as “routine workplace adjustments,” as it had intended to reduce staff at some of its operations in Asia.
According to reports from Bloomberg, the planned move could affect up to 30 % of some operations ‘ employees who work overseas, or 10 % of the workforce in those markets.
According to Kim Dae-jong at Sejong University in Seoul, Samsung has been trailing behind South Korea’s SK hynix in terms of high bandwidth memory ( HBM ) chips used in AI chipsets, which could be one of the biggest factors contributing to the profit estimate released on Tuesday.
” Given the circumstances, it appears that Samsung has also lost a significant number of ( HBM-related ) employees to SK hynix”, Kim told AFP.
The organization was facing a “grave condition”, he said.
In day trading in Seoul, Samsung shares dropped 1.31 percent, with its stock falling nearly 30 % over the previous six months.
” EXPECTED DECLINE”
According to the Samsung statement, management had “quickly assess our workplace culture” and make any necessary adjustments.
The company is the premier company of South Asian large Samsung Group, by far the largest of the family-controlled companies known as” chaebol” that dominate firm in Asia’s fourth-largest market.
Jene Park, a senior analyst at Counterpoint Research, said there had been” an expected decline” in Samsung’s memory sector, with delays in supply of the newest chips and general reductions in memory demand.
Even so, a sharp profit or sales decline was unlikely in the near future, he said.
” Samsung plays a significant role in the global supply chain”, Park said.
The company’s sales for the third quarter were projected to increase 17.2 % on-year to 79 trillion won, according to the company’s estimate for the third quarter.
At the end of this month, Samsung is anticipated to release its final earnings report.