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Samsung’s Q4 Operating Profit Plummets Amid Semiconductor Industry Slump

Despite a 35% decline in Q4, Samsung anticipates a brighter 2024, driven by AI and memory chip demand
South Korea
s 005930.KO Blue Chip 150 Tech 350 Semicon 75
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Samsung Electronics, the world’s largest memory chip manufacturer, has revealed a sharp decline in its operating profit for the fourth quarter of 2023, highlighting the ongoing challenges faced by the semiconductor industry. The company’s operating profit fell by 35% compared to the same period in the previous year, totaling 2.8 trillion won ($2.1 billion). This decline is attributed to the continued downturn in the system semiconductor sector and slower-than-expected recovery in smartphone demand.

Despite the downturn, Samsung’s latest quarterly figures showed a 15.2% increase in profit from the third quarter of 2023, indicating some signs of recovery. The company’s revenue for the fourth quarter was reported at 67 trillion won, a 4.9% decrease from the previous year. These figures fell short of market expectations, which had forecasted a higher operating profit and revenue.

The company’s struggles are part of a broader trend in the chip industry, which has seen significant cyclical fluctuations. For the entirety of 2023, Samsung’s operating profit plummeted by 84.9%, with a corresponding 14.6% drop in revenue. This decline was particularly stark in Samsung’s semiconductor division, which lost 12.7 trillion won in the first three quarters of the year.

However, analysts remain optimistic about Samsung’s prospects for 2024. The company is expected to benefit from a rebound in chip prices and the burgeoning demand for high-bandwidth memory semiconductors, driven by advancements in artificial intelligence. This optimism is further bolstered by Samsung’s upcoming launch of its first AI-powered smartphone in the U.S., part of the new Galaxy S series.

Despite the positive outlook for the coming year, Samsung’s shares experienced a 2.4% decline following the announcement of its quarterly guidance, reflecting investor caution amidst the ongoing industry challenges.

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