Seoul, Oct 29
Samsung Electronics, facing a challenging market environment and weaker-than-expected third quarter earnings, is preparing new strategies to drive recovery in early 2025, analysts said on Tuesday.

The world's largest memory chip maker reported a preliminary operating profit of 9.1 trillion won ($6.8 billion) for the third quarter, missing market expectations of over 10 trillion won.

Its operating profit more than trebled compared with the same period a year ago, but retreated 12.8 per cent from three months earlier, reports Yonhap news agency.

The disappointing earnings guidance has weighed on Samsung Electronics' stock, which fell by 30 percent over the past six months. Foreign investors led the sharp downfall.

Foreigners had been net sellers of Samsung Electronics shares for 33 consecutive trading days from September 3 to Friday, dumping a net 12.5 trillion won.

Over the period, its stock prices dropped 24.9 per cent to 55,900 won from 74,400 won, with its market capitalisation contracting to 333.7 trillion won from 444.2 trillion won.

In response, Samsung Electronics issued a rare public apology to customers, investors and employees, calling the situation a "crisis."

"The leadership team at Samsung Electronics wishes to apologise for not meeting your expectations with our performance," wrote Vice Chairman Jun Young-hyun, who took over the semiconductor division at Samsung Electronics in May.

"We have caused concerns about our technical competitiveness, with some talking about the crisis facing Samsung. As leaders of the business, we take full responsibility for this."

Analysts attribute Samsung Electronics' recent struggles to a combination of weakened demand in the memory market and its lagging competitiveness in the high-bandwidth memory (HBM) segment, critical for AI applications.

A report from Macquarie warns that Samsung could lose its leadership in the memory market due to potential DRAM oversupply, as demand for mobile and PC chips slows.

Samsung Electronics has also faced setbacks in the HBM market, where SK hynix currently dominates with the latest 5th generation HBM3E chips.

Reports indicate that Samsung Electronics failed to meet Nvidia's qualification tests to supply these advanced AI chips, while SK hynix began mass-producing 12-layer HBM3E chips in September.

Despite the current difficulties, some analysts believe that Samsung Electronics could experience a turnaround in the first half of next year, noting the South Korean chip giant may benefit from increased sales and higher prices as the memory market reaches its bottom and demand recovers.

"The memory market typically bottoms out in the first quarter and rebounds in the second," said Ryu Young-ho, an analyst at NH Investment & Securities Co. "We anticipate a recovery as demand and prices increase."

Samsung Electronics' development of the next-generation HBM4, slated for production in the first half of 2025, is also seen as a possible game-changer, he added.

Samsung Electronics will release its detailed third -quarter earnings report on Thursday.

Samsung seeks recovery amid disappointing Q3 earnings, stock drop