Samsung apologizes as it struggles to keep up with rivals in AI chip race

Samsung Electronics (OTCPK:SSNLF) has issued a rare apology after warning of weaker-than-expected third-quarter profit, as the South Korean tech giant struggles to keep up with rivals in the artificial-intelligence chip race amid delays.

The world’s biggest memory chipmaker said its preliminary estimate for Q3 operating profit was 9.1T won ($6.74B), down 12.8% from Q2. It expects to report Q3 sales of 79T won ($58.57B), up 6.7% sequentially.

“Despite strong HBM/server demand, the Memory Business recorded a decrease in results due to inventory adjustments by some mobile customers and an increase in supply of legacy products from memory companies in China,” said Samsung (OTCPK:SSNLF). “One-off expenses and currency effects also impacted performance.”

It added that the delivery of HBM3E chips to a major customer was delayed. These high-bandwidth chips were reportedly cleared for use in Nvidia’s (NVDA) AI processors in August.

To note, South Korea’s SK Hynix (OTCPK:HXSCF) and Micron Technology (MU) also produce HBM3E chips and are currently leading the market.

Jun Young-hyun, head of Samsung’s (OTCPK:SSNLF) device solutions, said management took full responsibility for the disappointing performance that “raised concerns about the fundamental technological competitiveness and the future of the company.”

The company pledged to restore its competitiveness, prepare for the future more thoroughly, and fix any organizational culture issues. Samsung (OTCPK:SSNLF) will report its financial results on October 31.