Samsung logo displayed on a cell phone display disguise with a binary code mirrored on it, a laptop laptop keyboard, a memory card, an adaper and cables are considered on this illustration photo taken in Krakow, Poland on January 30, 2023. (Represent by Jakub Porzycki/NurPhoto by technique of Getty Photos)
Jakub Porzycki | Nurphoto | Getty Photos
Samsung Electronics on Wednesday posted a 34.57% drop in working earnings within the fourth quarter from a twelve months within the past, per its guidance issued earlier this month.
Listed below are Samsung’s fourth-quarter outcomes versus estimates:
- Income: 67.78 trillion Korean won (about $51 billion), vs. 69.27 trillion Korean won anticipated by LSEG analysts
- Working earnings: 2.82 trillion Korean won, vs. 3.43 trillion Korean won anticipated by LSEG analysts
Samsung’s earnings for the quarter ending December fell 3.8% from a twelve months within the past, while working earnings dropped 34.57% within the identical length.
For the corpulent twelve months of 2023, its semiconductor trade fell correct into a narrative loss of 14.88 trillion Korean won, from a 23.82 trillion Korean won earnings a twelve months earlier on the relief of broken-down global save a query to, per LSEG records.
Samsung is the arena’s largest maker for dynamic random-get right of entry to memory chips which may perchance well well be chanced on in consumer devices similar to smartphones and laptop methods.
In its earnings guidance earlier this month, Samsung said it anticipated working earnings for the October-December quarter to be 2.8 trillion South Korean won ($2.13 billion), down 35% from the identical length a twelve months within the past when the company reported an working earnings of 4.31 trillion won.
Samsung said its fourth-quarter earnings and dealing earnings improved from the third quarter due to a recovery in memory chip prices and “endured strength” in sales of top rate point out merchandise.
“We can focal point on rising sales of excessive cost-added merchandise to toughen profitability,” said Samsung in its earnings call on Wednesday. It said it may perchance per chance perchance well snatch the rising save a query to for advanced merchandise and these aimed at generative AI, as neatly as strengthening AI functionalities in smartphones and other merchandise.
Daiwa Capital Markets in a Jan. 9 narrative said Samsung’s earnings and dealing earnings estimates had been “lower than our market estimates.”
“We deem that memory trade earnings improved sharply on increased memory shipment and prices,” said SK Kim of Daiwa Capital Markets after Samsung’s preliminary earnings.
As global macroeconomic headwinds persist, Samsung expects its earnings within the principle six months of 2024 to teach a “moderate enchancment” followed by “a extra essential enchancment” within the second half of the twelve months.
Softness in smartphone trade
Samsung said fourth-quarter smartphone sales and earnings declined from a quarter within the past, in segment from “fading outcomes” of fresh gadgets launched within the third quarter.
In 2023, Apple overtook Samsung as the arena’s No. 1 in the case of smartphone shipments, commanding a market a part of 20%, per records from global market be taught company Global Knowledge Corporation.
“Allotment of that was, frankly, as a result of a characteristic of how the smartphone market was shifting against the pinnacle rate. That’s why Apple was doing neatly because they’re extra focused on the pinnacle rate, whereas Samsung has a broader breadth,” said Bryan Ma, vice president of devices be taught at IDC, on CNBC’s “Declare Box Asia” on Wednesday.
Ma said that while Samsung slipped to world’s No. 2, the fashioned promoting sign of its smartphones increased by about $100 from 2020 to 2023.
“So it be very representative of how the market has shifted against top rate. I deem, as we chase forward, that is going to proceed to be one of the things that pressure greater margins,” said Ma.
Within the principle quarter, Samsung expects smartphone save a query to to drop due to seasonality but said the pinnacle rate segment is more possible to grow when put next to the identical length final twelve months.
Samsung said this will “leverage” its fresh, AI-enabled Galaxy S24 smartphones, which may perchance well well be field to open Wednesday, to broaden sales.
“We aim to place Samsung as the leading brand within the AI smartphone market,” said Samsung.
Memory recovery to proceed in 2024
Memory chip prices plummeted severely final twelve months due to inflationary pressures which possess caused patrons to sever back relief on smartphone and PC purchases, as neatly as excess inventories of chips that companies stockpiled at some point soon of the pandemic.
This has hit Samsung’s earnings arduous, with its working earnings plunging 77.6% within the third quarter from a twelve months within the past. Other chipmakers similar to Taiwan’s TSMC and SK Hynix possess also reported declines in quarterly profits.
However the global PC market returned to enhance within the fourth quarter, posting a modest twelve months-on-twelve months enhance of 3%, per global technology market analyst company Canalys.
Analysts suggested CNBC in October that broken-down save a query to within the memory trade has bottomed out, as chipmakers had been operating down excess inventories by production cuts.
“The memory market and save a query to for IT are anticipated to proceed recovering in 2024, though macroeconomic uncertainties remain to be considered,” said Samsung in a assertion on Wednesday.
The company added that they’re going to meet save a query to for chips in AI applications, scheme bigger into AI-enabled consumer product markets as neatly as “toughen its management in top rate merchandise and competitiveness in advanced-node semiconductors.”
Samsung is for the time being manufacturing 3-nanometer chips but has a roadmap to mass scheme 2-nanometer chips in 2025. In most cases, a reduction in nanometer size can yield extra noteworthy and efficient chips.
“We query extra sign hikes in 1H24 and a marked rebound in earnings for memory makers in 2H24 and 2025,” said Kim of Daiwa Capital Markets on Jan. 4.
