Samsung Electronics reported a significant decline in its profits for the first half of the year, highlighting growing challenges in its semiconductor division.
Decline in Semiconductor Division Profits
Samsung Electronics' semiconductor division recorded an operating profit of only 400 billion won ($288 million), far below analysts' consensus estimate of 2.73 trillion won. The shortfall was mainly attributed to losses in the foundry division and tightening US export controls.
Contract with Tesla and AI Aspirations
Despite the disappointing quarterly results, Samsung secured a $16.5 billion contract to manufacture AI chips for Tesla at its upcoming Taylor, Texas facility. This deal has boosted the company's financial outlook and driven share price increases.
Competition in the AI Memory Market
Samsung faces stiff competition from SK Hynix in the AI memory segment. Its struggles to keep pace may impact its prospects in the booming AI memory market, especially with construction delays at the Taylor plant.
Samsung's short-term difficulties in its semiconductor business emphasize the need for further investment and technological advancement to avoid growing gaps with competitors.
