Samsung Electronics reported on Wednesday that fourth-quarter operating profit fell 34.57% year-on-year, consistent with guidance issued earlier this month. Here's how Samsung's fourth-quarter results compared to expectations:
Revenue: 67.78 trillion won (about $51 billion), below the 69.27 trillion won expected by LSEG analysts
Operating profit: 2.82 trillion won, lower than LSEG analysts expected3.43 trillion won
In the quarter ended in December, Samsung's operating income fell 3.8% from the same period last year, while operating profit fell 34.57% during the same period.
Samsung said in its financial guidance released earlier this month that it expects operating profit from October to December to be 2.8 trillion won (approximately US$2.13 billion), a 35% decrease from the same period last year, when operating profit was 4.31 trillion won.
Samsung said its fourth-quarter revenue and operating profit increased from the third quarter due to a recovery in memory chip prices and "continued strong" sales of high-end display products.
Samsung is the world's largest maker of dynamic random access memory chips, whose products are widely used in consumer devices such as smartphones and computers.
Daiwa Capital Markets said in a report on January 9 that Samsung's revenue and operating profit expectations are "below our market expectations." Analyst SKKim said after Samsung released its preliminary financial report: Due to the increase in memory shipments and prices, the profitability of the memory business will improve significantly. As global macroeconomic headwinds persist, Samsung expects a "moderate improvement" in earnings in the first half of 2024 and a "more significant improvement" in the second half.
Memory chip prices fell sharply last year as inflationary pressures caused consumers to buy fewer smartphones and PCs, plus a glut of chip inventories that companies hoarded during the pandemic. This has hit Samsung's earnings hard, with its third-quarter operating profit plunging 77.6% from the same period last year. Other chipmakers such as Taiwan's TSMC and SK Hynix also reported declines in quarterly profits.
But according to data from global technology market analysis company Canalys, the global personal computer market returned to growth in the fourth quarter, growing slightly by 3% year-on-year.
Analysts said in October that weak demand in the memory industry had bottomed out as chipmakers reduced excess inventory through production cuts.
"Although macroeconomic uncertainty remains to be seen, the memory market and IT demand are expected to continue to recover in 2024," Samsung said in a statement on Wednesday. The company added that the products will meet the demand for chips for artificial intelligence applications, expand the artificial intelligence consumer product market, and "strengthen its leadership in high-end products and its competitiveness in advanced node semiconductors."
Samsung is currently producing 3nm chips, but its roadmap is to mass-produce 2nm chips in 2025. Typically, shrinking nanometer dimensions produces more powerful, more efficient chips.
Daiwa Capital Markets' Kim said on January 4: "We expect memory manufacturers to further raise prices in the first half of 2024 and see a clear earnings rebound in the second half of 2024 and 2025."