Samsung brand shown on a mobile phone display screen with a binary code reflected on it, a laptop keyboard, a memory card, an adaper and cables are seen in this illustration picture taken in Krakow, Poland on January 30, 2023. (Image by Jakub Porzycki/NurPhoto by means of Getty Illustrations or photos)
Jakub Porzycki | Nurphoto | Getty Photographs
Samsung Electronics on Wednesday posted a 34.57% fall in working gain in the fourth quarter from a yr in the past, in line with its advice issued before this thirty day period.
In this article are Samsung’s fourth-quarter results as opposed to estimates:
- Revenue: 67.78 trillion Korean received (about $51 billion), vs. 69.27 trillion Korean gained anticipated by LSEG analysts
- Working financial gain: 2.82 trillion Korean won, vs. 3.43 trillion Korean gained envisioned by LSEG analysts
Samsung’s earnings for the quarter ending December fell 3.8% from a yr ago, although functioning revenue dropped 34.57% in the same period.
In its earnings guidance before this thirty day period, Samsung said it anticipated working revenue for the October-December quarter to be 2.8 trillion South Korean won ($2.13 billion), down 35% from the exact same interval a 12 months in the past when the business claimed an functioning income of 4.31 trillion received.
Samsung claimed its fourth-quarter revenue and working gain improved from the 3rd quarter because of to a recovery in memory chip prices and “ongoing strength” in revenue of top quality show solutions.
“We will aim on increasing sales of large worth-extra goods to strengthen profitability,” claimed Samsung in its earnings call on Wednesday. It claimed it would seize the soaring desire for highly developed goods and all those aimed at generative AI, as effectively as strengthening AI functionalities in smartphones and other products and solutions.
Samsung is the world’s major maker for dynamic random-access memory chips which are uncovered in buyer units these types of as smartphones and personal computers.
Daiwa Cash Marketplaces in a Jan. 9 report claimed Samsung’s earnings and running gain estimates have been “reduced than our marketplace estimates.”
“We assume that memory business earnings improved sharply on greater memory shipment and charges,” reported SK Kim of Daiwa Capital Marketplaces immediately after Samsung’s preliminary earnings.
As worldwide macroeconomic headwinds persist, Samsung expects its earnings in the first 6 months of 2024 to show a “moderate advancement” adopted by “a more considerable advancement” in the 2nd half of the calendar year.
Softness in smartphone business
Samsung reported fourth-quarter smartphone income and revenue declined from a quarter back, in portion from “fading effects” of new versions launched in the third quarter.
In 2023, Apple overtook Samsung as the world’s No. 1 in terms of smartphone shipments, commanding a industry share of 20%, according to knowledge from worldwide market exploration organization International Knowledge Corporation.
“Section of that was, frankly, because of a operate of how the smartphone industry was shifting towards the quality. That’s why Apple was undertaking effectively simply because they’re more concentrated on the high quality, whereas Samsung has a broader breadth,” explained Bryan Ma, vice president of devices investigation at IDC, on CNBC’s “Squawk Box Asia” on Wednesday.
Ma claimed that though Samsung slipped to world’s No. 2, the normal selling value of its smartphones amplified by about $100 from 2020 to 2023.
“So it really is really consultant of how the market place has shifted toward high quality. I imagine, as we go ahead, that’s likely to go on to be 1 of the matters that generate larger margins,” claimed Ma.
In the to start with quarter, Samsung expects smartphone demand to drop due to seasonality but said the high quality section is probably to improve in comparison to the exact interval past year.
Samsung stated it will “leverage” its new, AI-enabled Galaxy S24 smartphones, which are set to launch Wednesday, to boost sales.
“We aim to set up Samsung as the top manufacturer in the AI smartphone current market,” stated Samsung.
Memory restoration to keep on in 2024
Memory chip price ranges plummeted drastically last calendar year owing to inflationary pressures that have prompted customers to lower back again on smartphone and Computer buys, as very well as excess inventories of chips that organizations stockpiled throughout the pandemic.
This has hit Samsung’s earnings challenging, with its running financial gain plunging 77.6% in the third quarter from a year back. Other chipmakers this kind of as Taiwan’s TSMC and SK Hynix have also described declines in quarterly earnings.
But the world-wide Laptop industry returned to growth in the fourth quarter, submitting a modest yr-on-year growth of 3%, according to global technologies industry analyst firm Canalys.
Analysts instructed CNBC in Oct that weak desire in the memory sector has bottomed out, as chipmakers have been managing down excess inventories by production cuts.
“The memory industry and desire for IT are expected to continue on recovering in 2024, however macroeconomic uncertainties keep on being to be found,” mentioned Samsung in a statement on Wednesday.
The agency added that they will meet demand for chips in AI purposes, develop into AI-enabled purchaser products marketplaces as nicely as “improve its management in high quality products and solutions and competitiveness in sophisticated-node semiconductors.”
Samsung is at this time producing 3-nanometer chips but has a roadmap to mass deliver 2-nanometer chips in 2025. Usually, a reduction in nanometer sizing can generate more impressive and efficient chips.
“We count on further more cost hikes in 1H24 and a marked rebound in earnings for memory makers in 2H24 and 2025,” claimed Kim of Daiwa Funds Marketplaces on Jan. 4.
