Samsung Electronics has issued an apology after the company released disappointing preliminary Q3 2024 results.
Although the company is still expecting to post profits of $6.8 billion for its third quarter, a year-on-year increase of 275 percent, the figure falls short of the $7.4 billion that had been expected.
In a note that addressed the company’s customers, investors, and employees, vice chairman Jun Young-hyun, the recently appointed head of Samsung Electronics' semiconductor business, said Samsung has a history of “challenge, innovation, and overcoming” that will allow it to make “the serious situation we are currently facing into an opportunity for a leap forward.”
He added: “Our management will take the lead in overcoming the crisis. Above all, we will restore the fundamental competitiveness of technology,” stating that “technology and quality are our lifeblood.”
“We will re-examine our organizational culture and work methods and immediately fix what needs to be fixed. We will rebuild our traditional organizational culture of trust and communication. If we find a problem in the field, we will expose it and have a heated discussion to improve it. In particular, we will actively communicate with investors whenever we have the opportunity,” the note read.
The company’s full Q3 2024 results will be released on October 31.
Separately, it was reported that Samsung Electronics Chairman Lee Jae-yong shut down speculation that the company might be looking to spin off its contract chip manufacturing operations, telling Reuters the company has no interest in offloading the business.
Despite posting significant profits over successive financial quarters, Samsung has been unable to keep pace with SK Hynix or TSMC, its biggest competitors in the memory chip and contract chip manufacturing markets.
Currently, market forecasts show the company is around six months behind leaders SK Hynix and three months behind Micron in the high-bandwidth memory (HBM) market, with Samsung also having delayed its mass production schedule for HBM3e 12H – its higher capacity DRAM chips – from Q2 2024 to H2 2024.
Samsung has also been losing ground to TSMC and earlier this month it was reported that South Korean companies including DeepX, FuriosaAI, and Mobilint have reportedly opted to have the Taiwanese semiconductor manufacturer produce its next generation processes, rather than stick with Samsung’s foundry services.
The company has also delayed construction at its fab in Taylor, Texas in order to upgrade the foundry process at the facility from 4nm to 2nm and allow the company to better compete with TSMC. However, the yield gap between the two is reportedly widening, with an industry insider telling BusinessKorea in September that Samsung’s GAA yield was sitting at “around 10-20 percent, which is insufficient for both orders and mass production."
In addition to product challenges, Samsung has also faced a summer of strikes at its facilities in South Korea and Sriperumbudur, near the city of Chennai, India. In both regions, workers engaged in strike action to demand higher wages and improved working hours.
Global job cuts have also been carried out by the company, with Samsung telling its global subsidiaries to reduce sales and marketing departments by 15 percent and administrative staff by around 30 percent.