Samsung's Q3 shows strong AI growth despite market headwinds, revenue up 7%

Samsung Electronics reported strong artificial intelligence-driven growth in its third quarter, even as it navigates challenging market conditions in some segments. The South Korean tech giant posted KRW 79.1 trillion in consolidated revenue, representing a 7% increase from the previous quarter, while operating profit declined to KRW 9.18 trillion due to one-off costs.

The company's AI strategy is showing tangible results, particularly in its semiconductor division. High Bandwidth Memory (HBM), crucial for AI applications, saw sales surge by more than 70% quarter-over-quarter. This growth underscores Samsung's strategic pivot toward AI-centric products, supported by its SmartThings platform that now serves 360 million users globally.

However, not all segments showed equal strength. The mobile market faced headwinds as some customers adjusted inventories, particularly in China. The Korean won's strength against the U.S. dollar resulted in a negative impact of approximately KRW 0.5 trillion on operating profit, primarily affecting the component businesses.

Looking ahead to 2025, Samsung is doubling down on AI integration across its product lineup. The company, which delivers over 500 million diverse products annually, is tailoring AI capabilities for each product category. This includes enhanced AI features in smartphones, particularly in the upcoming S25 series, and advanced AI functionality in home appliances.

In the semiconductor sector, Samsung expects AI-related demand to remain robust, even as mobile and PC segments show softness. The company is prioritizing production of high-value products like HBM and server SSDs, while also preparing for mass production of its advanced 2-nanometer Gate-All-Around process technology.

The Mobile Experience division shipped 58 million smartphones in the quarter, maintaining profitability despite rising material costs. The company aims for double-digit growth in flagship product sales, banking on AI-enhanced devices to drive consumer interest.

A notable concern emerges in the display business, where Samsung maintains a conservative outlook due to rising competition among panel makers, despite steady demand from major customers. The company plans to counter these pressures by strengthening its position in premium segments and diversifying into IT and automotive displays.

In the foundry business, while overall earnings declined due to one-off costs, Samsung successfully met its targets for advanced process nodes, particularly in sub-5 nanometer technologies. The company expects the foundry market to show double-digit growth in 2025, driven by high-performance computing and AI applications.

Samsung's brand value reached $100.8 billion according to Interbrand, marking the first time it has crossed the $100 billion threshold. The company attributes this milestone partly to its early presence in the mobile AI market and expanded offerings of AI-featured products.

The financial results reveal both Samsung's strengths and challenges: while AI-related segments show robust growth, currency fluctuations and competitive pressures in traditional markets pose ongoing challenges. The company's strategic focus on AI and premium products appears to be paying off, even as it navigates market uncertainties in some business segments.

Looking forward, Samsung's success will likely depend on its ability to maintain leadership in AI technology while managing challenges in more traditional market segments. The company's massive scale, with hundreds of millions of products shipped annually, positions it uniquely to capitalize on the AI revolution, but also requires careful navigation of market dynamics and competitive pressures.