Samsung is the world’s largest maker of reminiscence chips.
Jakub Porzycki | Nurphoto | Getty Images
Samsung Electronics on Tuesday stated it expects to submit a 35% drop in working profit in the fourth quarter of 2023, lacking expectations by a large margin as a rebound in semiconductor costs probably narrowed losses in the South Korean firm’s largest profit-driving section.
Samsung stated that for the October-December quarter, working profit is probably going to be 2.8 trillion South Korean received ($2.13 billion), down 35% from the similar interval a yr in the past the place the agency reported an working profit of 4.31 trillion received. Operating profit was 2.43 trillion won in the earlier quarter.
The profit steering fell far quick of LSEG’s SmartEstimate of 3.7 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 similar interval a yr in the past to 67 trillion received, the agency stated in the statement.
Samsung is the world’s largest maker for dynamic random-access reminiscence chips that are discovered in shopper gadgets equivalent to smartphones and computer systems.
“We estimate reminiscence costs began to rebound from 4Q23, pushed by manufacturing cuts by suppliers and a restoration in demand for cellular and PC,” stated SK Kim, analyst at Daiwa Capital Markets, in a Jan. 4 report.
Memory chip costs fell drastically final yr, in consequence of extra inventories post-Covid and weak demand for finish merchandise like smartphones and laptops.
This has hit Samsung’s earnings exhausting. Samsung’s third quarter operating profit plunged 77.6% from a yr in the past, despite the fact that it got here in higher than anticipated. Operating profit in the second quarter slumped by 95% in contrast to the similar interval a yr in the past.
The demand for AI throughout all main functions will drive the total semiconductor gross sales market to recuperate 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 may have finally bottomed out following manufacturing cuts.
“We anticipate additional value hikes in 1H24 and a marked rebound in earnings for reminiscence makers in 2H24 and 2025,” stated Kim of Daiwa Capital Markets, referring to the first and second half of this yr.
“As such, we anticipate tailwinds for share costs in the close to time period.”
Memory chip costs have began growing since the begin of November, thanks to “reminiscence producers’ strict management of provide and output,” in accordance to Galen Zeng, senior analysis supervisor of semiconductor analysis at IDC.
“The demand for AI throughout all main functions will drive the total semiconductor gross sales market to recuperate in 2024,” stated Zeng in a Dec. 21 report.
“The semiconductor provide chain, together with design, manufacturing, packaging, and testing, will bid farewell to the downturn in 2023.”
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