Samsung Electronics Q3 Operating Profit Falls Short of Expectations... Unusual Apology from Management

Company Shakes as Universal DRAM Performance Falters
Semiconductor Chief Jeon Young-hyun: "Challenge, Not Defense"
Announces Drastic Organizational Culture Improvement

Samsung Electronics' operating profit for the third quarter (July to September) of this year fell short of the market expectation of 10 trillion won. Initially, the financial investment industry had anticipated results in the low 10 trillion won range, but the actual outcome was lower than expected. Jeon Young-hyun, Vice Chairman and head of Samsung's semiconductor (DS) division, issued an unusual message immediately after the earnings announcement, bowing his head and apologizing to customers, investors, and employees for the "disappointing results that did not meet expectations."

Employees are arriving at the Samsung Electronics Seocho Building in Seocho-gu, Seoul, on the 8th, when Samsung Electronics announced its preliminary earnings of 79 trillion KRW in sales and 9.1 trillion KRW in operating profit for the third quarter of this year. Photo by Jinhyung Kang aymsdream@

On the 8th, Samsung Electronics disclosed its preliminary third-quarter earnings, reporting an operating profit of 9.1 trillion won and sales of 79 trillion won. Although these figures represent growth of 274% and over 17%, respectively, compared to the same period last year due to the base effect, they fell short of market expectations. According to financial information provider FnGuide, the average earnings forecast by securities firms was 10.0417 trillion won. Detailed results for each business segment, including semiconductors, smartphones, and TV & home appliances, will be revealed in the final earnings announcement at the end of this month.

The third-quarter earnings slump was largely due to a decline in general-purpose DRAM performance caused by weak demand for PCs and smartphones. According to the market research firm DRAMeXchange's pricing report released on the 30th of last month, the fixed transaction price for general-purpose PC DRAM products (DDR4 8Gb 1Gx8) averaged $1.70, down 17.07% from $2.05 the previous month. Additionally, the performance of high-value-added products such as High Bandwidth Memory (HBM) also failed to meet market expectations.

Vice Chairman Jeon issued an unusual apology message on this day. This is the first time that Samsung Electronics' top management has released a separate message regarding earnings. He said, "I apologize for causing concern with results that did not meet market expectations," and added, "All responsibility lies with the management leading the business, and the management will take the lead in overcoming the crisis and make this a turning point for a new leap forward."

Jeon emphasized overcoming the crisis through technological innovation. To this end, he pledged to carry out a rigorous organizational culture reform. His plans to overcome the crisis include restoring fundamental technological competitiveness, more thorough future preparation, and innovation in organizational culture and working methods. He stated, "Only new technologies that do not exist in the world and perfect quality competitiveness are the only way for Samsung Electronics to make a new leap," and emphasized, "We will rearm ourselves with a challenging spirit that races toward higher goals, not a defensive mindset aimed at preserving what we have."