Delay in Supply of NVIDIA Corporation AI Chips Expected to Impact Samsung's Q4 Financial Report

The world's largest memory chip maker, Samsung Electronics (SSNLF.US), is expected to announce on Wednesday its forecast for a continued slowdown in profit growth in the fourth quarter, mainly due to difficulties in meeting strong demand for artificial intelligence chips from NVIDIA Corporation (NVDA.US). It is expected that its operating profit will increase to 82 trillion Korean won (approximately 56 billion US dollars) in the quarter ending in December, higher than the low base of 28 trillion Korean won in the same period last year, but lower than the previous quarter's 91.8 trillion Korean won. Samsung is also the world's largest smartphone and television manufacturer and will announce its fourth quarter revenue and operating profit expectations on Wednesday, with detailed performance to be released at the end of January, including specific breakdowns of revenue from each business. In recent weeks, many analysts have lowered their profit expectations for Samsung, with some analysts predicting that Samsung's operating profit will fall below 80 trillion Korean won. In October last year, the South Korean company unusually apologized for its disappointing third quarter performance and said that it was making progress in supplying NVIDIA Corporation with artificial intelligence chips. However, analysts have stated that since then, the company has not provided any updates, and delays in supplying high-end chips to NVIDIA Corporation continue to put pressure on its profits. In November last year, Samsung replaced some executives in its chip division, appointed the head of the chip division as co-CEO, and put him in direct control of the struggling memory chip business. Samsung is the largest stock in South Korea by market capitalization, and its stock price fell by 32% last year, lagging behind the market's 10% decline. In contrast, analysts said that Samsung's local competitor, SK Hynix, the main supplier of advanced artificial intelligence storage chips to NVIDIA Corporation, is expected to achieve record profits in the fourth quarter. Price pressure Analysts said that chip prices are under pressure due to sluggish demand for traditional chips used in smartphones and personal computers, as well as increasing production from Chinese competitors. With the weak demand for consumer-centric products affecting the business of American chip maker Micron Technology, Inc. (MU.US), the quarterly revenue and profit expectations announced last month by this Samsung competitor were lower than Wall Street's expectations, dragging down stock prices. According to research firm TrendForce, in the fourth quarter of last year, prices of DDR4 DRAM chips used in personal computers fell by 13%, and are expected to drop by another 15% this quarter. This offsets the positive impact of the weakening currency on overseas profit repatriation. In December last year, after South Korean President Yoon Suk-yeol issued martial law, triggering political turmoil, and US President-elect Trump advocated raising import tariffs, the Korean won fell to its lowest level in 15 years. Analysts said that Samsung's business of producing logic chips designed by clients like Qualcomm (QCOM.US) is expected to continue to incur losses, eroding its chip earnings.