Samsung’s profit recovery seen weakening in Q3

Samsung Electronics is expected to flag more than a four-fold jump in quarterly profit on Tuesday on improving demand for chips, but the pace of its recovery is weakening, as it is slow to cash in on the artificial intelligence boom.

Operating profit for Samsung, the world’s top maker of memory chips, smartphones and TVs, likely stood at 10.33 trillion won ($7.67 billion) in the quarter ended Sept 30, according to an average from 29 analysts with LSEG SmartEstimate, weighted toward those who are more consistently accurate.

This is a jump from 2.43 trillion won a year earlier, but little changed from 10.44 trillion won reported in the previous quarter.

The global semiconductor market has been recovering from a downturn last year, driven by chips used in AI servers, but demand recovery for conventional chips used in smartphones and PCs is slowing, analysts said.

The South Korean company has been scrambling to catch up with smaller rivals SK Hynix and Micron in a race to supply high-end AI chips to Nvidia, while facing growing competition from Chinese rivals for commodity chips.

Samsung’s bread-and-butter chip division is expected to swing to an operating profit of 5.5 trillion won from a year earlier, but this will be down 15% from the preceding quarter, also hurt by Samsung setting aside provisions for bonuses, according to estimates from 10 analysts compiled by Reuters.