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Samsung Forecasts Memory Chip Business Recovery in Q1 After Prolonged Slump

Samsung Anticipates Profit in Memory Division, Despite Quarterly Losses and Foundry Business Challenges
South Korea
s 005930.KO Blue Chip 150 Tech 350 Semicon 75
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Samsung Electronics, a leading technology company, announced an optimistic outlook for its memory chip business, expecting a return to profitability in the first quarter after enduring a significant industry downturn. This forecast was made during a conference call by Jaejune Kim, a Samsung vice president, following the release of the company’s fourth-quarter earnings.

Despite facing a challenging period, Samsung’s memory chip business showed signs of recovery in the fourth quarter, thanks to increased demand in high bandwidth memory, particularly related to generative artificial intelligence and server solid-state drives. This positive development is a significant shift from the previous quarters’ losses.

For the fourth quarter of 2023, Samsung’s device solutions unit, which includes the semiconductor division, reported an operating loss of 2.2 trillion won ($1.7 billion). This figure, although substantial, marks an improvement over the 3.8 trillion won loss in the third quarter. The company’s overall operating profit for the quarter stood at 2.8 trillion won, down 34.4% from the same period in 2022, while revenue decreased by 3.8% to 67.8 trillion won. The net profit also dropped sharply by 73.4% to 6.3 trillion won.

The recovery in the memory business was partly attributed to a reduction in customer inventories and expanding investments in generative AI across the IT industry. These factors contributed to a better market scenario for both personal computers and mobile devices. However, Samsung’s foundry business, which manufactures chips for clients, continued to struggle due to subdued demand in mobile and other applications.

In the mobile sector, Samsung faced setbacks, losing its top position in smartphone manufacturing to Apple. The company introduced its AI-powered Galaxy S24 series in a bid to regain its footing in the competitive market. The mobile experience business unit reported a decrease in operating profit during the October-to-December period.

For the entire year of 2023, Samsung’s operating profit plummeted by 84.9% to 6.6 trillion won, and revenue fell by 14.3% to 258.9 trillion won. Net profit also saw a significant reduction of 72.2% to 15.5 trillion won.

These financial challenges have impacted Samsung’s stock, which was down 1.4% in late morning trading. The earnings report was released shortly before the market opened, highlighting the company’s ongoing efforts to navigate a complex and rapidly evolving technological landscape.

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