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Samsung Faces AI Chip Sales Slowdown Amid U.S. Export Restrictions

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Samsung Electronics warned on Friday that its AI chip sales will be sluggish in the first quarter due to U.S. export restrictions on China, as well as a shift in demand toward more advanced chips. The company is working to launch an improved version of its high-bandwidth memory (HBM) chips in March to address these challenges.

Samsung’s struggles are compounded by its reliance on Chinese customers, who accounted for about 20% of its HBM sales. The U.S. government’s expanded restrictions on semiconductor exports have put additional pressure on the company, unlike its competitor SK Hynix, which remains Nvidia’s primary supplier of HBM chips for AI applications.

Kim Jae-june, Samsung’s executive vice president of memory, acknowledged that “temporary restrictions” would impact HBM sales but expressed optimism about future improvements. Meanwhile, Nvidia CEO Jensen Huang recently indicated that Samsung needs to “engineer a new design” to meet Nvidia’s standards.

Despite these efforts, Samsung reported a 29% decline in operating profit for Q4, totaling 6.5 trillion won ($4.48 billion). The company also faces headwinds in the mobile market, where competition from Apple and Chinese rivals has eroded profits. Samsung’s decision to use Qualcomm processors for its entire Galaxy S25 lineup, instead of its in-house Exynos chips, represents another setback for its semiconductor division.

While AI-driven demand for memory chips is expected to recover from Q2 onward, Samsung’s long-term performance will depend on its ability to mass-produce advanced 12-layer HBM3E chips for Nvidia.

 

Micron Shares Drop as Sluggish PC Demand and Weak Forecast Cloud AI Growth Potential

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Micron Technology’s shares fell by approximately 15% on Thursday after the company issued a grim forecast for the upcoming quarter, highlighting weak demand for personal computers (PCs) and smartphones, which overshadowed the positive growth in its AI-related chip sales.

Weak Demand for DRAM Chips

The market for dynamic random-access memory (DRAM) chips, which are commonly used in personal computers and smartphones, has been struggling since the end of the pandemic. This decline is driven by a lingering supply glut and continued sluggish demand from consumers. As a result, Micron’s forecast for its flash memory chip revenue in fiscal 2025 looks bleak, as these chips are heavily dependent on PC and mobile phone shipments. According to William Kerwin, an analyst at Morningstar, the post-pandemic growth in demand for traditional PCs has not met expectations, and AI-enabled computers have yet to achieve widespread popularity.

Slow Transition to Windows 11

Micron is also facing headwinds from the slower-than-expected adoption of Windows 11, after Microsoft announced the end of support for Windows 10. This gradual transition has contributed to the challenges in the broader PC market, impacting demand for memory chips.

If the losses hold, Micron’s market value could decline by more than $17 billion, bringing it to approximately $99 billion. This downward shift in value reflects concerns about Micron’s ability to recover from these demand-related issues.

Growth in AI Chips and High-Bandwidth Memory

Despite the challenges in the PC and mobile markets, Micron has seen strong growth in its high-bandwidth memory (HBM) chips, which are used in advanced AI systems. Revenue from these chips more than doubled sequentially, and Micron is positioning itself to take advantage of market expansion opportunities from data center investments in 2025. Analysts from Piper Sandler believe that Micron’s HBM segment remains intact and will continue to drive growth.

Micron is one of only three major HBM chip providers, alongside SK Hynix and Samsung, which has helped boost its stock by around 22% this year. Analysts expect HBM demand to remain a key driver of Micron’s performance moving forward.

Analyst Reactions

Despite the positive outlook for AI-related chips, at least 10 brokerages have lowered their price targets for Micron following its disappointing earnings results. According to data from LSEG, Micron’s 12-month forward price-to-earnings ratio is now 10.67, significantly lower than Qualcomm’s 13.4 and Advanced Micro Devices’ 23.97.