Samsung Electronics announced on Friday that its operating profits soared by 129.85 percent year-on-year in the fourth quarter of 2024, although they declined from the previous quarter due to challenges in meeting the demand for chips used in artificial intelligence servers. As the flagship subsidiary of the South Korean conglomerate Samsung Group, which is the largest family-controlled business group in Asia’s fourth-largest economy, this news comes after the company acknowledged a “crisis” in October, raising concerns about its “fundamental technological competitiveness and future.”
For the period from October to December, Samsung reported an operating profit of 6.5 trillion won ($4.5 billion), a significant increase from 2.82 trillion won a year earlier, according to a regulatory filing. Sales rose by 11.8 percent to 75.78 trillion won, and net income reached 7.75 trillion won, up 22.2 percent from the previous year. This net profit surpassed market expectations, as reported by Yonhap News Agency.
However, the Q4 operating profit was lower than the previous quarter’s 9.18 trillion won. Samsung attributed this decline to “soft market conditions, particularly for IT products, and an increase in expenditures, including R&D.” The company indicated that overall earnings improvement in the first quarter of 2025 may be limited due to weakness in the semiconductor sector.
US tech giant Nvidia, which relies on semiconductors for the AI industry, has turned to SK hynix, Samsung’s South Korean competitor, as its primary supplier of high-bandwidth memory (HBM) chips for AI graphics processing units (GPUs). Samsung has faced difficulties in meeting Nvidia’s demands. Gloria Tsuen, a vice president and senior credit officer at Moody’s Ratings, noted that Samsung’s technological leadership in the semiconductor market has diminished over recent years. The increasing demand for AI chips has also made it more challenging to develop new, custom-made chips promptly.
Neil Shah of Counterpoint Research pointed out that Samsung’s cautious approach to cost management in the face of challenging customer demands has contributed to its difficulties. He noted that Samsung has lost the initial wave of the semiconductor AI boom to rivals like SK hynix in HBM for AI servers and is now facing competition from Micron for DRAM in AI smartphones and PCs, particularly in its latest Galaxy S25 series.
However, Bloomberg reported on Friday that Samsung has received approval to supply a version of its fifth-generation high-bandwidth memory chips to Nvidia, according to sources familiar with the matter.
