Samsung Posts Drop in Operating Profits
Samsung Electronics reported a sharp decline in operating profits for the fourth quarter of 2023, struggling to cope with weak demand for consumer devices. The company, which is the flagship subsidiary of South Korean conglomerate Samsung Group, recorded an operating profit of 2.82 trillion won ($2.1 billion) from October to December 2023, down 34.57% from the same period in the previous year. Sales also dipped by 3.8% to 67.78 trillion won, and net profit saw a significant drop of 73.4% compared to the previous year.
Samsung, one of the world’s largest manufacturers of memory chips and smartphones, attributed the weak performance to sluggish demand. However, the company remains optimistic about the outlook for 2024. It predicts that the recovery of demand for smartphones and PCs will drive the foundry market back to the levels of 2022. Samsung acknowledged that there are potential obstacles such as interest rate policies and geopolitical issues that could impact growth in 2024, but overall, it maintains a positive stance.
As a major player in the memory chip industry and a manufacturer of premium high-bandwidth memory chips for AI processors, Samsung has been facing intense competition. The company recently launched its latest Galaxy smartphones with new AI features in an effort to regain its position as the world’s largest phone seller, currently held by Apple.
These figures from Samsung come after SK Hynix, the world’s second-largest memory chipmaker, announced that it had returned to profitability after four consecutive quarters of losses. OpenAI’s CEO, Sam Altman, reportedly met with the leaders of Samsung and SK Hynix in South Korea last week, indicating potential collaborations between the companies.
Despite a more gradual recovery than expected, several positive trends, including rising DRAM prices and a resurgence in the smartphone market, contribute to an optimistic outlook, according to industry experts. Samsung’s strategic positioning in the evolving market conditions is expected to enable the company to thrive.
Looking ahead, the global semiconductor market is predicted to recover in 2024 and grow by 11.8%. Moody’s Investors Service recognizes Samsung’s large net cash position as a significant financial buffer.
In conclusion, while Samsung faced a decline in operating profits and weak demand in the fourth quarter of 2023, the company remains hopeful for the future. With the expectation of recovering markets and its strategic positioning, Samsung is poised to improve its overall performance in the coming year.
