Samsung emblem displayed on a telephone display with a binary code mirrored on it, a laptop computer keyboard, a reminiscence card, an adaper and cables are seen on this illustration photograph taken in Krakow, Poland on January 30, 2023. (Photo by Jakub Porzycki/NurPhoto by way of Getty Images)
Jakub Porzycki | Nurphoto | Getty Images
Samsung Electronics on Wednesday posted a 34.57% drop in working revenue within the fourth quarter from a yr in the past, consistent with its steerage issued earlier this month.
Here are Samsung’s fourth-quarter outcomes versus estimates:
- Revenue: 67.78 trillion Korean gained (about $51 billion), vs. 69.27 trillion Korean gained anticipated by LSEG analysts
- Operating revenue: 2.82 trillion Korean gained, vs. 3.43 trillion Korean gained anticipated by LSEG analysts
Samsung’s income for the quarter ending December fell 3.8% from a yr in the past, whereas working revenue dropped 34.57% in the identical interval.
For the complete yr of 2023, its semiconductor enterprise fell right into a file lack of 14.88 trillion Korean gained, from a 23.82 trillion Korean gained revenue a yr earlier on the again of weak world demand, in response to LSEG knowledge.
Samsung is the world’s largest maker for dynamic random-access reminiscence chips that are present in shopper gadgets corresponding to smartphones and computer systems.
In its earnings steerage earlier this month, Samsung mentioned it anticipated working revenue for the October-December quarter to be 2.8 trillion South Korean gained ($2.13 billion), down 35% from the identical interval a yr in the past when the agency reported an working revenue of 4.31 trillion gained.
Samsung mentioned its fourth-quarter income and working revenue improved from the third quarter attributable to a restoration in reminiscence chip costs and “continued strength” in gross sales of premium show merchandise.
“We will focus on increasing sales of high value-added products to improve profitability,” mentioned Samsung in its earnings name on Wednesday. It mentioned it could seize the rising demand for superior merchandise and people aimed toward generative AI, in addition to strengthening AI functionalities in smartphones and different merchandise.
Daiwa Capital Markets in a Jan. 9 report mentioned Samsung’s income and working revenue estimates had been “lower than our market estimates.”
“We assume that memory business earnings improved sharply on increased memory shipment and prices,” mentioned SK Kim of Daiwa Capital Markets after Samsung’s preliminary earnings.
As world macroeconomic headwinds persist, Samsung expects its earnings within the first six months of 2024 to point out a “moderate improvement” adopted by “a more significant improvement” within the second half of the yr.
Softness in smartphone enterprise
Samsung mentioned fourth-quarter smartphone gross sales and revenue declined from 1 / 4 in the past, partially from “fading effects” of recent fashions launched within the third quarter.
In 2023, Apple overtook Samsung because the world’s No. 1 when it comes to smartphone shipments, commanding a market share of 20%, in response to knowledge from world market analysis agency International Data Corporation.
“Part of that was, frankly, because of a function of how the smartphone market was shifting toward the premium. That’s why Apple was doing well because they’re more concentrated on the premium, whereas Samsung has a broader breadth,” mentioned Bryan Ma, vp of gadgets analysis at IDC, on CNBC’s “Squawk Box Asia” on Wednesday.
Ma mentioned that whereas Samsung slipped to world’s No. 2, the common promoting worth of its smartphones elevated by about $100 from 2020 to 2023.
“So it’s very representative of how the market has shifted towards premium. I think, as we go forward, that’s going to continue to be one of the things that drive higher margins,” mentioned Ma.
In the primary quarter, Samsung expects smartphone demand to drop attributable to seasonality however mentioned the premium section is more likely to develop in comparison with the identical interval final yr.
Samsung mentioned it can “leverage” its new, AI-enabled Galaxy S24 smartphones, that are set to launch Wednesday, to spice up gross sales.
“We aim to establish Samsung as the leading brand in the AI smartphone market,” mentioned Samsung.
Memory restoration to proceed in 2024
Memory chip costs plummeted drastically final yr attributable to inflationary pressures which have brought about customers to chop again on smartphone and PC purchases, in addition to extra inventories of chips that corporations stockpiled in the course of the pandemic.
This has hit Samsung’s earnings arduous, with its working revenue plunging 77.6% within the third quarter from a yr in the past. Other chipmakers corresponding to Taiwan’s TSMC and SK Hynix have additionally reported declines in quarterly earnings.
But the worldwide PC market returned to development within the fourth quarter, posting a modest year-on-year development of three%, in response to world expertise market analyst agency Canalys.
Analysts informed CNBC in October that weak demand within the reminiscence business has bottomed out, as chipmakers have been working down extra inventories by manufacturing cuts.
“The memory market and demand for IT are expected to continue recovering in 2024, though macroeconomic uncertainties remain to be seen,” mentioned Samsung in a press release on Wednesday.
The agency added that they may meet demand for chips in AI functions, increase into AI-enabled shopper product markets in addition to “strengthen its leadership in premium products and competitiveness in advanced-node semiconductors.”
Samsung is presently manufacturing 3-nanometer chips however has a roadmap to mass produce 2-nanometer chips in 2025. Typically, a discount in nanometer measurement can yield extra highly effective and environment friendly chips.
“We expect further price hikes in 1H24 and a marked rebound in earnings for memory makers in 2H24 and 2025,” mentioned Kim of Daiwa Capital Markets on Jan. 4.