Seoul, Jan 08, (V7N) - Samsung Electronics, South Korea's tech giant, announced on Wednesday that it anticipates a significant decline in fourth-quarter profits compared to the previous quarter. The dip comes as the company struggles to keep up with strong demand for chips used in artificial intelligence (AI) servers.

Samsung Electronics, the flagship subsidiary of the Samsung Group, remains a dominant player in Asia’s fourth-largest economy. However, the company has acknowledged ongoing challenges. In October, Samsung issued a rare public apology, admitting it faced a “crisis” and raised concerns about its “fundamental technological competitiveness and the future of the company.”

In its regulatory filing, Samsung estimated its October-December operating profit at 6.5 trillion won ($4.5 billion), reflecting a 130.5% increase from the same period last year. However, this marks a nearly 30% drop from the 9.18 trillion won operating profit it recorded in the third quarter.

Sales for the fourth quarter are expected to reach approximately 75 trillion won, a 10.7% year-on-year increase but a 5.2% decrease from the previous quarter.

Samsung addressed the preliminary results in an explanation page, stating, “In light of the Q4 2024 results significantly falling short of market expectations, we aim to mitigate confusion among the market and investors until the final results are announced.”

The company attributed the downturn to challenges in its Device Solutions division, responsible for memory and foundry operations. The division reported declining sales and profits due to “worsening market conditions, particularly for IT-related products.”

Despite achieving record-high quarterly revenue for high-capacity products, weak demand for conventional PC and mobile products impacted overall performance. The Non-Memory Business also reported declines, citing “weak demand from key applications” and increased research and development (R&D) expenditures.

Samsung’s consumer electronics division, which includes smartphones, saw reduced profitability due to “diminished impact from new mobile product launches and intensified competition.”

Despite these setbacks, shares in Samsung rose 0.72% in Seoul trading on Wednesday. The company is expected to release its final earnings report by the end of this month.

END/WD/SMA/