On Friday, Samsung Electronics warned about low sales of its artificial intelligence chips in the current quarter due to US export restrictions on China, as well as due to work on launching an improved version of its high-end chips.
Advanced chips used for artificial intelligence remain one of the few strong points in the semiconductor market. However, the company is facing competition from SK Hynix and Nvidia, a major supplier of HBM (High Bandwidth Memory) chips used in GPUs for AI. At the same time, Samsung is trying to meet Nvidia's demands.
In December, the US introduced new restrictions on China's semiconductor industry, including restrictions on the sale of HBM chips. Samsung, which received about 20% of its revenue from HBM sales to Chinese clients, may be more affected than its competitors.
Export Restrictions Affecting Demand
"In the first quarter, there will be temporary restrictions on our HBM chip sales," said Kim Jae-Jung, Executive Vice President of Samsung's memory division, during the earnings report.
"We expect a decline in demand for HBM not only due to US export restrictions but also due to changing demands for improved chips from major clients," he added.
Samsung, which began selling 8-layer and 12-layer HBM3E products in the third quarter, plans to launch improved versions of these chips in March.
Nvidia CEO Jensen Huang recently stated that Samsung needs to "develop a new design" for supplying HBM chips to his company, according to Korea JoongAng Daily.
In October, Samsung reported progress in supplying HBM to Nvidia, but since then has not provided public updates.
Kim also noted that the restrictions on GPU shipments are causing delays in some clients' projects, which is affecting demand for memory chips for servers in data centers.
Nvidia chips remain in short supply due to high demand and manufacturing difficulties.
Limited Profit Growth
Samsung confirmed that its operating profit in the fourth quarter amounted to 6.5 trillion won (about $4.48 billion), which is 29% lower than in the third quarter.
The company forecasts limited profit growth in the first quarter due to weak demand for memory chips, smartphones, and personal computers.
Samsung expects slower growth in the mobile market this year due to economic uncertainty and rising inflation, which could negatively affect consumer demand.
Last week, the company introduced a new flagship Galaxy smartphone with AI features, aiming to increase the profitability of its mobile business to over 10% in this quarter. This was necessary after profitability declined due to competition from Apple and Chinese manufacturers.
However, this year, Samsung decided to use Qualcomm processors across the entire Galaxy S25 lineup, abandoning its own Exynos chip. This, according to the company, may continue the weakness of its logic chip business in the current quarter.
Market Reaction
Samsung’s shares fell by 2.8% after a four-day holiday break, while the overall market dropped by 0.75%. SK Hynix shares fell by 9.6% due to concerns about the impact of cheap Chinese AI models, such as DeepSeek.