Samsung is the world’s biggest maker of memory chips.
Jakub Porzycki | Nurphoto | Getty Images
Samsung Electronics on Tuesday said it expects to post a 35% drop in operating profit in the fourth quarter of 2023, missing expectations by a wide margin as a rebound in semiconductor prices likely narrowed losses in the South Korean company’s biggest profit-driving segment.
Samsung said that for the October-December quarter, operating profit is likely to be 2.8 trillion South Korean won ($2.13 billion), down 35% from the same period a year ago where the firm reported an operating profit of 4.31 trillion won. Operating profit was 2.43 trillion won in the previous quarter.
The profit guidance fell far short of LSEG’s SmartEstimate of 3.7 trillion won, which is weighted more heavily toward expectations of analysts who have been consistently more accurate.
Fourth-quarter revenue likely fell 4.9% from the same period a year ago to 67 trillion won, the firm said in the statement.
Samsung is the world’s largest maker for dynamic random-access memory chips which are found in consumer devices such as smartphones and computers.
“We estimate memory prices started to rebound from 4Q23, driven by production cuts by suppliers and a recovery in demand for mobile and PC,” said SK Kim, analyst at Daiwa Capital Markets, in a Jan. 4 report.
Memory chip prices fell drastically last year, as a result of excess inventories post-Covid and weak demand for end products like smartphones and laptops.
This has hit Samsung’s earnings hard. Samsung’s third quarter operating profit plunged 77.6% from a year ago, even though it came in better than expected. Operating profit in the second quarter slumped by 95% compared to the same period a year ago.
The demand for AI across all major applications will drive the overall semiconductor sales market to recover in 2024.
In late October, Samsung and SK Hynix – the world’s second-largest DRAM memory chip maker – signaled during their third quarter earnings…
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