Samsung is the world’s largest maker of reminiscence chips.
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Samsung Electronics on Tuesday stated it expects to put up a 35% drop in working revenue within the fourth quarter of 2023, lacking expectations by a large margin as a rebound in semiconductor costs probably narrowed losses within the South Korean firm’s largest profit-driving phase.
Samsung stated that for the October-December quarter, working revenue is more likely to be 2.8 trillion South Korean received ($2.13 billion), down 35% from the identical interval a 12 months in the past the place the agency reported an working revenue of 4.31 trillion received. Operating revenue was 2.43 trillion received within the earlier quarter.
The revenue steerage fell far in need of LSEG’s SmartEstimate of three.7 trillion received, which is weighted extra closely towards expectations of analysts who’ve been constantly extra correct.
Fourth-quarter income probably fell 4.9% from the identical interval a 12 months in the past to 67 trillion received, the agency stated within the assertion.
Samsung is the world’s largest maker for dynamic random-access reminiscence chips that are present in client gadgets reminiscent of smartphones and computer systems.
“We estimate memory prices started to rebound from 4Q23, driven by production cuts by suppliers and a recovery in demand for mobile and PC,” stated SK Kim, analyst at Daiwa Capital Markets, in a Jan. 4 report.
Memory chip costs fell drastically final 12 months, because of extra inventories post-Covid and weak demand for finish merchandise like smartphones and laptops.
This has hit Samsung’s earnings laborious. Samsung’s third quarter working revenue plunged 77.6% from a 12 months in the past, regardless that it got here in higher than anticipated. Operating revenue within the second quarter slumped by 95% in comparison with the identical interval a 12 months in the past.
The demand for AI throughout all main functions will drive the general semiconductor gross sales market to get well in 2024.
In late October, Samsung and SK Hynix – the world’s second-largest DRAM reminiscence chip maker – signaled throughout their third quarter earnings calls that weak demand could have lastly bottomed out following manufacturing cuts.
“We expect further price hikes in 1H24 and a marked rebound in earnings for memory makers in 2H24 and 2025,” stated Kim of Daiwa Capital Markets, referring to the primary and second half of this 12 months.
“As such, we anticipate tailwinds for share prices in the near term.”
Memory chip costs have began growing because the begin of November, due to “memory manufacturers’ strict control of supply and output,” based on Galen Zeng, senior analysis supervisor of semiconductor analysis at IDC.
“The demand for AI across all major applications will drive the overall semiconductor sales market to recover in 2024,” stated Zeng in a Dec. 21 report.
“The semiconductor supply chain, including design, manufacturing, packaging, and testing, will bid farewell to the downturn in 2023.”
This is breaking information. Please verify again for updates.
Source: www.cnbc.com”