Barely a few years ago, Samsung Electronics was a main force in the world semiconductor race, dominating a flea sector and looking at the TSMC of Taiwan in the battle for supremacy in another.
But recent triples – including its inability to capitalize very early on the boom of artificial intelligence – exceeded it, according to experts, while the company has trouble deepening market share losses.
The operating profit in the second quarter of Samsung dropped by 55% to 4.7 won billions ($ 3.4 billion), compared to $ 10.4 billions of Won ($ 7.5 billion) a year earlier, although its revenues increased slightly compared to the same period last year.
Operating profit for its flea division, historically a milk cow which represented two thirds of its total profit, decreased by almost 94% from April to June compared to a year ago.
He blame The worse performance than expected on stock value adjustments, the low use rate for its contractual flea manufacturing activity and the continuous repercussions of American export controls on the AI advanced to China – a key market for Samsung.
The disappointing report on Thursday’s results revives concerns about the future of the South Korean besieged technology giant.
Samsung warned investors of its dismal performance in its profits at the beginning of the month.
The results come from an agreement of $ 16.5 billion with Tesla, announced this week, to produce her new fleas – a decision that should increase the prospects of Samsung.
For the future for the second half of the year, Samsung said that he planned to respond proactively to the growing demand for value-added products and to continue to strengthen competitiveness in advanced semiconductors.
The largest conglomerate in South Korea has encountered significant opposite winds in recent years in its two main sources of income: the manufacture of memory chips, which help the devices to store data, and logical chips, which feed data processing and calculation.
Formerly the first manufacturer of industry memory chip, Samsung has lost ground in favor of its rivals such as the South Korean technology SK Hynix and American Micron, in particular in the fast growing market in the large-band memory sector (HBM). HBM, composed of DRAM (Dynamic Access Department of Access) chips) used for short -term data storage, are essential for AI processors developed by companies like NVIDIA and AMD.
Meanwhile, the leader in the Samsung, TSMC, TSMC, advanced technologies and advanced market share industry.
In the first quarter of this year, SK Hynix exceeded Samsung Direct the World DRAM marketwhile TSMC extended his domination In logical fleas with a market share of 68%, compared to only 8% for Samsung, according to the TrendForce market research company.
Sanjeev Rana, head of research in Korea in Clsa, a brokerage company, said that a series of Samsung’s “missteps” – in particular the management of management to anticipate the sharp increase in AI demand – has contributed to its current difficulties.
“They were slow to recognize the upcoming revolution of AI, and they bet on other products, other technologies, which, with hindsight, have not proved to be very good bets,” he said, explaining that Samsung neglected the potential of HBM at the start.
Consequently, Samsung has so far failed to be a supplier for its most advanced broadband memory product in Nvidia, which represents almost 80% of HBB global demand last year, according to Rana. The product has repeatedly failed the Nvidia performance tests, although it expects the company to erase them over the next two months.
While Samsung announced in June that it had managed to secure orders from AMD and Broadcom, Rivals SK Hynix and Micron have already started to provide more advanced memory flea samples to customers.
At the same time, Samsung’s logical flea activities – once at the heart of its ambition to compete with TSMC – are also under assembly pressure. Despite dozens of billions of investments in recent years, the company has not been able to obtain significant orders for its advanced chips, which has led to underused facilities, said Rana.
Last year, the CLSA estimated that the Samsung contractual Tamias manufacturing company displayed an operating loss of 5.6 won billions ($ 4.1 billion). This figure is expected to reach 6.6 won billions ($ 4.8 billion) this year.
The American restrictions on the sale of advanced fleas in China have also wreaked havoc on the income of Samsung, as shipments to Chinese customers and projects were forced to suspend the pending regulatory examination, said Joanne Chiao, analyst at TrendForce.
But with certain chips having now erased the examination process, the second quarter should be the most affected period, she added.
Tesla offered Samsung a lifeline this week. Its CEO, Elon Musk, announced that the electric vehicle company had operated the Korean flea manufacturer to make its new tokens for autonomous cars and humanoid robots in an agreement of $ 16.5 billion.
“The new Samsung Giant Texas Fab will be dedicated to the manufacture of the Tesla new generation AI6 chip,” he said in a Publish. “Samsung has agreed to allow Tesla to help maximize manufacturing efficiency. This is a critical point, because I will produce the line personally to accelerate the pace of progress. ”
Samsung shares have jumped more than 6.9% to reach their highest level since September after the news of the agreement.
According to Samsung, Tesla is currently obtaining on its AI4 chips, which feed its advanced driver systems called complete autonomous software (FSD), but it has enlisted TSMC to produce its AI5 chips, according to Musk.
The agreement took place after Samsung postponed the operational start of its Tamias manufacturing factories in Taylor, Texas, to 2026 from its 2024 original calendar, when it had trouble gaining customers for the project.
Ray Wang, director of research by focusing on the semiconductor industry at Futurum Group, qualified the agreement with Tesla “significant”, claiming that this could stimulate the profitability of Samsung and validate its capacities in the production of advanced fleas.
The agreement will also help increase the use of its Texas facilities, improving the company’s return on investment, he added.
Rana said that although mass production for the Tesla project will not start before 2027, the agreement is a boost to the feeling of the market and represents “a big word of confidence”.
“Management has done a lot of restructuring for this company in the last 12 to 15 months, so I think they now understand what the problems were, and they have made efforts to solve these problems,” he said. “Things will be better from the second half (of the year).”
