In accordance with expectations, Samsung Electronics’ operating profit decreased by 34.57% in the fourth quarter.

Following its earlier-this-month projection, Samsung Electronics reported a 34.57% decrease in operating income in the fourth quarter compared to the same period last year.

Samsung’s fourth-quarter performance vs estimates are as follows:

Revenue: 67.78 trillion Korean won, or around $51 billion, as opposed to the 69.27 trillion Korean won that LSEG analysts had predicted.
Operating profit: 2.82 trillion Korean won vs LSEG analysts’ expectations of 3.43 trillion Korean won
Samsung had a 3.8% decline in sales and a 34.57% loss in operating profit during the December quarter compared to the same period last year.

Samsung predicted an operating profit of 2.8 trillion South Korean won ($2.13 billion) for the October–December quarter in its earnings outlook earlier this month. This is a 35% decrease from the company’s operating profit of 4.31 trillion won during the same time last year.

Due to “continued strength” in sales of premium display products and a rebound in memory chip pricing, Samsung reported higher revenue and operating profit in the fourth quarter compared to the third.

When it comes to manufacturing dynamic random-access memory chips, which are used in computers and cellphones, Samsung is the biggest manufacturer in the world.

In research released on January 9, Daiwa Capital Markets stated that Samsung’s operational profit and sales projections were “lower than our market estimates.”

After Samsung released its preliminary profits, SK Kim of Daiwa Capital Markets stated, “We assume that memory company revenue improved dramatically on increased memory shipments and prices.”

Samsung anticipates a “moderate improvement” in its profitability in the first half of 2024, followed by “a more significant improvement” in the second half of the year, provided that global macroeconomic headwinds continue.

In 2024, memory restoration will continue.

Due to surplus semiconductor inventories that corporations accumulated during the pandemic and inflationary pressures that pushed customers to reduce their purchases of smartphones and PCs, memory chip prices fell precipitously last year.

Due to this, Samsung’s operational profit fell by 77.6% in the third quarter of last year, severely hurting the company’s profitability. Other semiconductor manufacturers have also revealed drops in their quarterly profitability, including SK Hynix and Taiwan’s TSMC.

However, according to global technology market research firm Canalys, the PC market saw a small 3% year-over-year gain in the fourth quarter, marking a return to growth for the industry.

In October, analysts told CNBC that because chipmakers have been reducing output to reduce excess inventory, the memory industry’s sluggish demand had peaked.

Samsung released a statement on Wednesday stating that while macroeconomic risks remain to be observed, the market for memory and demand for IT are projected to continue improving in 2024.

The company also said that it will grow into consumer product sectors that are enabled by AI, fulfill the need for chips in AI applications, and maintain its leadership in luxury goods and efficiency in advanced-node semiconductors.

With a plan to begin mass-producing 2-nanometer circuits in 2025, Samsung is now producing 3-nanometer chips. Generally speaking, processors with smaller nanoscale dimensions are more potent and effective.

On January 4, Kim of Daiwa Capital Markets stated, “We expect more price hikes in 1H24 and a marked recovery in profits for memory makers in 2H24 and 2025.”

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