Samsung Electronics announced on Thursday that its third-quarter sales and operating profit slightly exceeded its projections, while its chip division experienced a significant decline in profitability compared to the previous quarter.

The semiconductor unit recorded an operating profit of 3.86 trillion won (approximately $2.8 billion) in the third quarter, marking a 40% decrease from the preceding quarter.

Despite strong demand for its artificial intelligence and conventional server products in the memory chip department, Samsung cited “inventory adjustments” that negatively impacted mobile demand and challenges arising from “the increasing supply of legacy products in China.”

Driven by artificial intelligence, the foundry unit at Samsung saw a surge in demand for advanced nodes; however, the company noted that demand for mobile and PC products fell short of expectations.

Samsung acknowledged that the recovery in mobile and PC demand is set to be postponed, despite a projected increase in interest for more sophisticated products propelled by investments in AI.

Samsung’s third-quarter results slightly surpassed its earlier guidance provided this month, with revenue at 79.1 trillion won compared to the projected 79 trillion, and operating profit at 9.18 trillion versus 9.1 trillion won.

The provided guidance figures fell significantly below the LSEG’s forecast of 11.456 trillion won in operating profit. In an unusual move, Samsung’s Vice Chairman Jun Young-hyun, who now leads the company’s device solutions division, issued a rare apology following the release of the guidance.

Looking ahead, Samsung anticipates that continued demand for advanced chipsets will drive growth in the coming year. The company also foresees robust server demand as tech firms maintain substantial investments.

Meanwhile, shares of Samsung Electronics on the South Korean stock exchange have declined by 24.71% year-to-date.