Samsung's China Chip Pivot Gains Steam With 54% Export Surge Amid US Market Struggles

Samsung Electronics SSNLF has resorted to Chinese technology groups to drive its struggling semiconductor division, according to a report.

The South Korean electronics group struggled to bag prominent U.S. customers despite aggressively investing in its American manufacturing facilities, the Financial Times reports.

In March, Samsung noted that the value of its exports to China jumped 54% between 2023 and 2024 amid intensifying U.S. semiconductor sanctions.

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In 2024, Samsung sold the logic die supply over three years to Baidu Inc BIDU semiconductor design subsidiary Kunlun Tech.

In 2024, Samsung announced a $40 billion investment in expanding its advanced chip manufacturing and packaging facilities in Texas, lagging behind arch-rival Taiwan Semiconductor Manufacturing Co TSM, which committed a minimum of $100 billion in chip fabrication plants in Arizona.

Samsung also lagged behind local rival SK Hynix in the high bandwidth memory. Jimmy Goodrich of b told the Financial Times that the demand frenzy from Nvidia Corp NVDA and Broadcom Inc AVGO restricted SK Hynix’s access to Chinese companies.

Samsung emerged as the leading supplier of HBM in China, and it is a supplier of Huawei’s Ascend 910 series of AI chips as per SemiAnalysis.

Goodrich and Samsung acknowledged Samsung’s compliance with the U.S. semiconductor sanctions.

Samsung expects fourth-quarter sales of $51.38 billion (75 trillion Korean won versus 67.78 trillion Korean a year ago) and operating profit of 6.5 trillion Korean won (versus 2.82 trillion Korean won a year ago). The consensus for fourth-quarter operating profit stood at 7.7 trillion Korean won.

The cautious operating profit guidance marks pressure from research and development costs and the ramp-up of manufacturing capacity to cater to Nvidia. Additionally, weakness in demand for conventional memory chips used in PCs and mobile phones also affected the profit forecast.

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