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Advantest Raises Profit Forecast Amid AI Chip Demand and DeepSeek Market Impact

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Japan’s Advantest has increased its full-year operating profit forecast by 37%, citing strong demand for chip testing tools used in artificial intelligence (AI) applications. The company expects operating income to reach 226 billion yen ($1.46 billion) for the financial year ending March 31, 2025.

Key Highlights:

  • AI-Driven Demand Surge: Advantest is seeing increased demand for its semiconductor testing tools, particularly for AI and high-performance computing (HPC) chips.
  • Supply Chain Improvements: CEO Douglas Lefever emphasized the company’s ability to scale up supply chain operations to meet AI sector needs.
  • Q4 Profit Growth: Operating income for October-December surged 158% to 69.2 billion yen.
  • DeepSeek’s Market Impact: The emergence of DeepSeek, a Chinese AI startup, has recently affected market sentiment. However, Advantest has not observed changes in customer demand forecasts.
  • Long-Term AI Growth: Lefever reaffirmed that ongoing AI advancements will drive sustained semiconductor and testing tool demand.

Samsung Q4 Earnings Expected to Be Hit by Nvidia AI Chip Supply Delay

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Samsung Electronics (005930.KS), the world’s largest memory chip maker, is forecasted to report slowed profit growth in the fourth quarter, as it struggles to meet Nvidia’s (NVDA.O) soaring demand for AI chips. Despite an expected operating profit of 8.2 trillion won ($5.6 billion) in the quarter ending December, up from 2.8 trillion won a year ago, this figure represents a decline from the previous quarter’s 9.18 trillion won.

Analysts have recently revised their earnings forecasts downward, with some projecting Samsung’s operating profit to fall below 8 trillion won. A key issue has been delays in Samsung’s supply of high-end AI chips to Nvidia, which has continued to impact Samsung’s earnings, despite an October apology from the company for its third-quarter performance and an earlier pledge to address the chip shortage.

In November, Samsung reshuffled its chip division leadership, naming its chip division chief co-CEO and granting him direct control over the struggling memory chip business. Meanwhile, Samsung’s shares fell 32% last year, underperforming the broader market’s 10% decline.

Contrastingly, SK Hynix (000660.KS), a major supplier of advanced AI memory chips to Nvidia, is expected to report record earnings for the fourth quarter, benefiting from strong demand for its products.

The broader semiconductor market is facing additional pressure, with weaker demand for traditional chips used in smartphones and PCs, and rising competition from Chinese chipmakers, leading to declining chip prices. DRAM prices, particularly DDR4 chips used in personal computers, have dropped as much as 13% in Q4 and are expected to fall another 15% in the current quarter, according to TrendForce.

The South Korean won’s depreciation in December to its weakest level in 15 years, fueled by political instability and concerns over U.S. tariffs under President-elect Trump, has provided some relief in the form of increased overseas earnings, but this has not been enough to offset weak chip prices.

Samsung is expected to release detailed results later in January, offering a breakdown of its earnings by business segment.

Tech Group Urges U.S. to Halt AI Chip Export Restrictions Amid Growing Concerns

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A coalition of tech companies, including Amazon (AMZN.O), Microsoft (MSFT.O), and Meta (META.O), has urged the Biden administration to reconsider a pending rule that would restrict global access to AI chips. The rule, which could be finalized as soon as Friday, is viewed by the Information Technology Industry Council (ITI) as a threat to U.S. leadership in artificial intelligence.

The proposed rule, backed by the U.S. Commerce Department, aims to regulate AI chip exports to prevent adversaries, particularly China, from gaining access to advanced technologies that could enhance their military capabilities. While the restrictions are framed as a national security measure, industry leaders argue that they could hinder U.S. companies’ ability to compete globally and inadvertently benefit foreign competitors.

In a letter to U.S. Commerce Secretary Gina Raimondo, ITI CEO Jason Oxman expressed concerns about the rushed nature of the rule. Oxman warned that implementing such a consequential policy at the end of President Biden’s term could result in unforeseen consequences, damaging the U.S.’s competitive edge in the rapidly growing AI sector.

The group called for a more measured approach, recommending that any new regulations be introduced as a proposed rule rather than a final one. They stressed the importance of considering the broader geopolitical and economic impact, which could jeopardize the U.S.’s position in global AI development.

The anticipated rule has sparked strong opposition within the tech industry, with the Semiconductor Industry Association and Oracle executives voicing their concerns. Oracle’s executive vice president, Ken Glueck, criticized the measure, describing it as an overly broad regulation that would impact nearly all commercial cloud computing globally.

The Commerce Department and the White House have yet to respond publicly to the mounting criticism, but the issue continues to garner significant attention from both industry leaders and policymakers as the Biden administration enters its final days.