In a recent development, South Korean tech titan Samsung Electronics Co Ltd SSNLF forecasted a 35% fall in its operating profit for the fourth quarter of 2023. This projected decline is primarily due to a recovery in semiconductor prices.
What Happened: Samsung’s operating profit for Q4 2023 is expected to be 2.8 trillion South Korean won ($2.13 billion), a 35% decrease from the same quarter the previous year. This estimate is considerably lower than the SmartEstimate of 3.7 trillion won by LSEG, according to a report by CNBC.
This downturn also amounts to a 4.9% decline in fourth-quarter revenue year-over-year, to 67 trillion won, largely due to increased memory chip prices. The surge in prices began in Q4 2023, following production cuts and a spike in demand for mobiles and PCs.
Memory chip prices had dipped due to an oversupply and weak demand for end products like smartphones and laptops after the COVID-19 pandemic. This drop severely impacted Samsung’s earnings, with their Q2 operating profit falling by 95% year-over-year.
In late October, Samsung and SK Hynix, the world’s second-largest DRAM memory chip maker, indicated that weak demand may have reached its lowest point due to production cuts. Analysts predict further price increases in 2024 and a significant recovery in earnings for memory makers in the following years.
Why It Matters: Samsung had already experienced a decline in third-quarter sales and profits. Despite this, the company continued to invest in AI and premium products in hopes of a turnaround.
Moreover, Samsung is set to launch its next flagship smartphone, the Galaxy S24, on Jan. 17. The new offering, focusing on AI, could be a game-changer for the tech giant’s revenue in the coming years.
Read Next: Five Books Bill Gates, Warren Buffett And Other Top Minds Recommend You Read To Be More Successful In Life
Image Via Shutterstock
Engineered by Benzinga Neuro, Edited by Kaustubh Bagalkote
The GPT-4-based Benzinga Neuro content generation system exploits the extensive Benzinga Ecosystem, including native data, APIs, and more to create comprehensive and timely stories for you. Learn more.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
