By Hyunjoo Jin and Joyce Lee
SEOUL (Reuters) – Samsung Electronics said on Friday it expected limited first-quarter earnings growth due to weak memory chip business conditions, as it continues to work towards providing high-end chips to Nvidia.
The South Korean firm is also grappling with weak smartphone sales and said it aimed to revive mobile margins to above 10% this quarter, a sign that competition with Apple would intensify as the rivals roll out new phones with artificial intelligence features.
“In the first quarter of 2025… overall earnings improvement may be limited due to weakness in the semiconductors business,” Samsung said in a statement after confirming operating profit was 6.5 trillion won ($4.48 billion) in the fourth quarter, down 29% from the third quarter.
The world’s largest memory chip maker expected overall memory market demand to recover from the second quarter, and warned expanding U.S. chip export controls would sharply increase the volatility of demand for high-end memory chips used for AI chipsets.
Advanced chips used for AI have been the bright spot in the weak memory chip market, but rival SK Hynix is Nvidia’s main supplier of high-bandwidth memory (HBM) chips used in AI graphics processing units, whereas Samsung has struggled to meet Nvidia’s requirements.
Analysts said Samsung’s 2025 results and stock price will depend on whether it can supply volumes of advanced 12-layer HBM3E chips to Nvidia.
Samsung said in October that it was making progress in supplying HBM chips to Nvidia, but has not released any public updates since then.
“In the end, performance in the HBM market is very important … Conventional memory prices are likely to remain weak throughout the year as sluggish demand from traditional consumers is unlikely to reverse rapidly,” said Kim Kwang-jin, an analyst at Hanwha Securities.
SK Hynix and the world’s largest contract chipmaker, Taiwan’s TSMC, both reported record quarterly profit figures this month due to the AI boom, with SK Hynix topping Samsung’s numbers for the first time.
Samsung said detailed investment plans for 2025 have not been finalised, but memory chip capital spending would be similar to last year’s investment.
Its capital spending totalled 53.6 trillion won last year, including 46.3 trillion won on its chip business that includes logic and memory chips as well as a foundry business.
Samsung’s fourth-quarter operating profit was up 130% from a low base a year earlier when the memory chip industry was still struggling with its worst downturn in decades and in line with preliminary figures it reported earlier this month.
Operating profit in Samsung’s mobile phone business fell 22% to 2.1 trillion won in the fourth quarter from a year earlier.
Its chip division swung to an operating profit of 2.9 trillion won, but that was less than half the 8.08 trillion won profit smaller peer SK Hynix reported during the same period.
Shares in Samsung were down 2.2% in early trade, versus a 0.75% drop in the wider market.
($1 = 1,447.5200 won)
(Reporting by Joyce Lee and Hyunjoo Jin; Editing by Miyoung Kim and Jamie Freed)
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