SEOUL – Samsung Electronics on Thursday reported progress on a major supply deal for artificial intelligence-focused chips, which aims to reassure investors after a slowdown in semiconductor profits in the last quarter.

The South Korean tech giant said its July-September operating profit rose more than 277 percent from a year earlier to 9.18 trillion won ($6.65 billion). But the figure was a 12 percent drop from the second quarter, which Samsung attributed largely to one-time costs such as providing employee incentives in its computer chip business and the effects of a weaker U.S. dollar .

Samsung’s semiconductor division made an operating profit of 3.86 trillion won ($2.8 billion) during the quarter, recovering from a deficit in 2023 but down sharply from 6.45 trillion won ($4.67 billion) reported in the April-June period.

While Samsung saw solid demand for AI and server chips last quarter, its mobile chip business weakened as some customers adjusted inventories. The market was also affected by the increased supply of old memory products from Chinese manufacturers, the company said in a statement.

More importantly, Samsung lagged behind key competitors such as SK Hynix in HBM3E, the latest generation of high-bandwidth memory chips that are used to power AI applications.

During a conference call, Samsung executive vice president Jaejune Kim said the company recently made “significant progress” in a qualification testing process to supply its HBM3E products to an unspecified “major customer,” a development that said it could increase sales during the fourth quarter. Kim’s comments sparked speculation that Samsung had struck a supply deal with Nvidia, a major US manufacturer that designs advanced chips that power AI.

“In the fourth quarter, while mobile and PC memory demand may experience weakness, AI growth will keep demand at robust levels. In this context, the company will focus on increasing sales of high-bandwidth memory and high-density products,” Samsung said.