On October 30, it was reported that just a few months ago, Samsung Electronics appeared poised to capitalize on the global artificial intelligence (AI) surgeThe company's profits soared, and its stock price reached an all-time highHowever, the current landscape shows a troubling shift, raising concerns about the company's competitiveness in the AI chip sector being weaker than anticipatedNotably, in the high bandwidth memory (HBM) market, Samsung has fallen behind its rival, SK Hynix, and in the outsourced chip manufacturing arena, it has yet to surpass TSMCThis decline is reflected in Samsung's share price, which has dropped a staggering 32% since its peak on July 9, erasing approximately $122 billion from the company's market value.

Samsung, the world's largest manufacturer of memory chips, smartphones, and televisions, previously pledged to undergo comprehensive reforms to regain its competitive edge

However, international fund management firms such as Pictet Asset Management and Janus Henderson Investors appear skeptical about the company's swift recoveryData reveals that since the end of July, overseas investors have net sold Samsung shares worth around $10.7 billion.

Sat Duhra, a portfolio manager at Janus Henderson, expressed his outlook, stating, “In recent months, we have reduced our position in Samsung by more than half — it was our largest position in JulyAlthough the stock is now valued at attractive levels, we currently have no intention of buying.”

The current state of Samsung paints a picture of a company heavily reliant on smartphone and consumer electronics sales, which still compose the largest share of its revenueThe recent turmoil in its chip business forced Samsung to unusually apologize to investors earlier this month for disappointing performance.

This year's lackluster performance starkly highlights how decisive AI has become in determining winners and losers in the semiconductor industry

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Within South Korea, SK Hynix has established itself as the clear leader in the HBM market.

Examining the contrasting fortunes of companies that have flourished due to AI chips reinforces the anxiety surrounding SamsungAs foreign investors led the exit from Samsung, Nvidia has scaled its heights to become one of the largest companies globallyMeanwhile, TSMC, the primary manufacturer of chips designed by Nvidia and Apple, has seen its market value increase by more than $330 billion this year alone.

So, what has led Samsung onto this rollercoaster ride? Share prices surged to historic highs following the announcement of a staggering 15-fold increase in operating profit for the June quarterInvestor optimism peaked in August, fueled by expectations that Samsung might secure additional contracts to supply high-bandwidth memory for AI processors developed by Nvidia.

However, in early October, shortly after SK Hynix began mass production of its new HBM chips, Samsung acknowledged that it had delayed the production of its latest generation of HBM chips, slowing its attempts to keep pace with SK Hynix

Meanwhile, American competitor Micron Technology has intensified its efforts in the HBM domain and reported strong demand for its products.

Earlier this month, the head of Samsung's chip division notably apologized to investors for the company's preliminary results falling short of expectations, citing challenges in delivering HBM chips to Nvidia on time.