Samsung Electronics cautioned about sluggish sales of its AI chips in the current quarter due to U.S. export restrictions to China and its efforts to launch an improved version of high-end chips. The company mentioned that its competitor, SK Hynix, is the main supplier of high-bandwidth memory chips to Nvidia for AI GPUs, while Samsung has faced challenges meeting Nvidia's requirements.
The U.S. imposed new restrictions on China's semiconductor industry in December, impacting Samsung's HBM chip sales to Chinese customers. Kim Jae-june, an executive at Samsung's memory business, stated that there would be temporary restrictions on HBM chip sales in the first quarter. The company plans to release updated HBM3E products in March.
Nvidia's CEO, Jensen Huang, noted that Samsung needs to "engineer a new design" to supply HBM chips. While Samsung reported a 29% decline in earnings for the fourth quarter, it expects slow growth in the first quarter due to weak conditions in the memory chip market. The company aims to boost mobile margins above 10% this quarter and is working on supplying advanced HBM3E chips to Nvidia.
Shares in Samsung fell by 2.8%, while SK Hynix shares dropped by 9.6% on concerns over the impact of low-cost Chinese AI models. Despite the challenges, Samsung anticipates a recovery in overall memory market demand from the second quarter onwards. Analysts believe Samsung's future results and stock prices will hinge on its ability to supply advanced HBM3E chips to Nvidia.
Both Samsung and Taiwan's largest contract chipmaker reported record profits this month thanks to the AI boom. Samsung's mobile phone business saw a 22% decline in operating profit, while its chip division recorded an operating profit but fell short of SK Hynix's figures. Samsung indicated that detailed investment plans for 2025 were still under consideration, with memory chip capital spending projected to align with the previous year's expenditure.