
Fortune and Dismay
Snakes why did it have to be snakes...or in this case plunging profits! Samsung the tech giant from South Korea just announced they're expecting a 56% drop in profits for the second quarter. Fifty six percent! That's enough to make even Belloq chuckle with glee. Seems they're having a bit of a tussle trying to keep up with Nvidia in the AI chip game. It reminds me of that time I was chasing after the Ark only to find out it was already swiped by the Nazis. Always one step behind eh?
Won der What Went Wrong?
The bean counters in Seoul are projecting an operating profit of around 4.6 trillion won for the quarter ending in June down from 10.44 trillion won last year. That's a bigger drop than my hat after a particularly rough chase! LSEG's SmartEstimate figured they'd pull in about 6.26 trillion won but alas even their estimates couldn't save the day. Revenue's also taking a hit falling short of expectations at 74 trillion won. I've seen better fortunes in a dusty forgotten temple.
The HBM Heist
Samsung is a big player in smartphones and memory chips but they're getting dusted by the likes of SK Hynix and Micron in the high bandwidth memory chip race—the fancy tech used in AI chips. Apparently SK Hynix has snagged a sweet deal with Nvidia becoming their key supplier. It’s like they found the Holy Grail of chip contracts! I heard Samsung has been trying to get their latest HBM chips certified by Nvidia but whispers from the grapevine say those plans have been pushed back. A delay? In this business? That's like finding out the treasure map leads to a dead end.
The Expert's Eye
MS Hwang from Counterpoint Research says the earnings disappointment is due to ongoing losses in the foundry business and the high margin HBM business isn't quite picking up the slack. Ray Wang from Futurum Group chimed in saying it's clear Samsung hasn't passed Nvidia's qualifications for their most advanced HBM. "Given that Nvidia accounts for roughly 70% of global HBM demand the delay meaningfully caps near term upside," Wang said. That's like saying "Indy you found the treasure but the Nazis already took it back to Berlin!"
AMD: A Consolation Prize?
Apparently Samsung has secured some HBM supply for AI processors from AMD but Wang says it won't contribute much to the second quarter results. A consolation prize eh? Reminds me of that time I found a rusty old idol instead of the golden one. Still every little bit helps I suppose. Meanwhile Samsung's chip foundry business is still struggling with weak orders and competition from Taiwan Semiconductor Manufacturing Company. It's a jungle out there folks!
Cutting Costs and Counting Losses
Rumor has it that Samsung told its subsidiaries to cut 30% of staff in some divisions. Ouch! That's a bigger cut than I make with my trusty whip! Despite all this Samsung's stock is up about 16% year to date. Go figure! They'll be releasing their detailed third quarter results towards the end of the month. Will they find a way to turn things around? Only time will tell. As for me I'm off to find another lost artifact. Perhaps I'll stumble upon a secret stash of high bandwidth memory chips along the way. After all it's not the years honey it's the mileage...and in this case the market share!
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