Samsung Electronics Co (SSNLF.US) reported its sixth consecutive quarterly decline in operating profit, reflecting continued weakness in global demand for consumer electronics. Fourth-quarter operating profit fell 35% year-on-year to 2.8 trillion won ($2.1 billion), compared with the average estimate of 3.7 trillion won. Sales were 67 trillion won, lower than the expected 70.31 trillion won. Operating profit in 2023 will be 6.54 trillion won, a year-on-year decrease of 84.92%.
The results underscore that demand for smartphones and the memory chips that power modern electronics remains sluggish due to economic uncertainty. In December, rival Micron Technology (MU.US) reported better-than-expected revenue prospects, indicating that data center construction may make up for the tepid market for computers and mobile devices.
"I think this shows that the rebound is slower than we all thought. Prices are not rising as fast and demand in certain industries is not as strong," said Tom Kang, research director at Counterpoint Technology Market Research.
Samsung predicted in October that the long-sluggish $160 billion memory market would gradually rebound in 2024, driven by a boom in artificial intelligence development. Executives said at the time that prices should begin to bottom out around the second half of 2023. The company will release a full earnings report on January 31, which will include details on each segment.
Samsung Electronics currently aims to catch up with rival SK Hynix in the high-density memory (HBM) chip field, and plans to increase production capacity in this field by 2.5 times by 2024. HBM is an advanced chip that processes data faster. It works with hardware such as accelerators from Nvidia Corp. to speed up data processing for intensive tasks such as training artificial intelligence models.
Samsung is also counting on launching a slew of new devices and foldables to drive growth in 2024. The South Korean company is preparing to launch its latest product in the United States later this month, just as investors worry that Apple's (AAPL) iPhone 15 may be running out of steam just months after its launch.