SEOUL, Jan 8, 2025 (BSS/AFP) - South Korea's Samsung Electronics said on Wednesday it expected fourth-quarter profits to be sharply down compared with the previous quarter, falling short of expectations as the company struggled to meet robust demand for chips used in artificial intelligence servers.

The firm is the flagship subsidiary of South Korean giant Samsung Group, by far the largest of the family-controlled conglomerates that dominate business in Asia's fourth-largest economy.

However, the world's largest memory-chip maker issued a rare apology in October acknowledging it was facing a "crisis" and that questions had arisen about its "fundamental technological competitiveness and the future of the company".

It said in a regulatory filing that its October-December operating profits were expected to be 6.5 trillion won ($4.5 billion), up 130.5 percent from a year earlier.

That was down nearly 30 percent from the firm's operating profit of 9.18 trillion won in the third quarter.

Sales were seen increasing 10.7 percent on-year to approximately 75 trillion won, also down 5.2 percent compared with the previous quarter.

"In light of the preliminary Q4 2024 results significantly falling short of market expectations, we aim to mitigate confusion among the market and investors until the final results are announced," Samsung's management said in an explanation page.

It noted that Samsung's Device Solutions division, which is in charge of memory and foundry business units, among others, "reported declines in sales and profits due to worsening market conditions, particularly for IT-related products".

"Despite achieving record-high quarterly revenue in Q4, driven by strong sales of high-capacity products, weak demand for conventional PC and mobile products weighed on overall performance," it said. 

Non-Memory Business performance also declined due to "weak demand from key applications" and "increased R&D spending".

Samsung's consumer electronics division, which includes mobile phones, also experienced a decline due to "reduced impact from new mobile product launches and intensified competition".

Shares in Samsung rose 0.72 percent in Seoul on Wednesday despite the report.

Samsung is expected to release its final earnings report at the end of this month.