Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Samsung Electronics has reported weak demand for its memory chips is expected to limit earnings growth in the current quarter, with its problems compounded by US restrictions on supplying advanced semiconductors used in artificial intelligence hardware.
The South Korean company said on Friday that it expects overall memory chip demand to start recovering in the second quarter. Its shares fell around 2.5 per cent on disappointment at the weak earnings forecast.
“In the first quarter of 2025 . . . overall earnings improvement may be limited due to weakness in the semiconductor business,” Samsung, the world’s largest memory chipmaker, said in a statement.
Kim Jae-june, executive vice-president of Samsung’s memory business, later added: “There will be some temporary restrictions in our [high-bandwidth memory] chip sales in the first quarter. We expect some impact on our HBM demand from not just US restrictions on exports of high-end chips but also a shift in demand for improved chips by major clients.”
Samsung has been under pressure after failing to ride the AI investment wave. Its HBM AI chips have not matched the capabilities of those made by SK Hynix, nor won approval from Nvidia, a key customer. Samsung has also been hit hard by the sluggish Dram chip cycle due to its bigger exposure to commodity chips and the rise of Chinese rivals such as CXMT.
SK Hynix shares dropped as much as 12 per cent on Friday morning as markets reopened after the lunar new year break — catching up on concerns that big spending on data centres may have peaked, with DeepSeek’s budget AI model triggering panic over future demand.
Samsung executives told analysts on Friday the company was reducing its exposure to conventional memory semiconductors, focusing more on higher-margin chips used in AI servers, where demand “remains strong”. But its contract-chipmaking foundry business remained weak amid soft demand for chips used in smartphones and PCs.
Its investment in memory chips would be similar to last year’s level, it said. The company reported total capital spending of Won53.6tn ($37bn) last year, with the bulk going to its chip unit.
Samsung has reorganised its team of engineers to strengthen its HBM competitiveness, but Nvidia chief Jensen Huang said this month that Samsung had to “engineer a new design” to supply HBM chips to his company, although he added that “they can do it and they are working very fast”.
For the first time, SK Hynix overtook Samsung on quarterly profit in the fourth quarter, driven by its lead in HBM sales, which it expects to double this year. Samsung’s chip division reported an operating profit of Won2.9tn in the October-December quarter, down 26 per cent from the previous quarter.
“Samsung has lost its leadership in HBMs and it seems like even in commodity memory they are more exposed to Chinese competition,” said Sanjeev Rana, head of Korea equity research at CLSA.
“Hynix has been more resilient because they have this big portion of revenue from HBM demand which is really good,” he added. “China’s production of commodity memory has been growing and could pick up in the coming months . . . and there are some concerns about that as well.”
Read the full article here
