SEOUL – Samsung Electronics flagged a continued recovery in memory chips and tech demand in 2024, after reporting a 34 per cent year-on-year drop in fourth-quarter profit despite a memory price rebound, as consumer demand remained weak in many businesses.
The world’s biggest maker of memory chips said it expected mobile and PC makers to place more and better chips in devices as use of artificial intelligence (AI) expands, while the need to replace older servers would also aid a gradual recovery in demand.
“In 2024, the memory business expects the market to continue to recover despite various potential obstacles, including interest rate policies and geopolitical issues,” Samsung said in a statement.
Samsung said operating profit fell to 2.8 trillion won (S$2.8 billion) in October-December, versus 4.3 trillion won in 2022, and in line with Samsung’s own estimate of 2.8 trillion won flagged earlier in January.
For the full year, its chip business swung to a record loss of 14.9 trillion won in 2023 from a 23.8 trillion won profit a year earlier, hit by an unprecedented downturn caused by weak demand for gadgets that use chips.
However, fourth-quarter losses were less than every other quarterly loss in 2023 in the business that has historically been Samsung’s cash cow.
Losses in the chip business shrank to 2.18 trillion won in the fourth quarter, versus a 3.75 trillion won loss in the third quarter, as memory chip prices rebounded.
Chinese PC and mobile makers began to restock memory chips during the quarter, after using up their own stocks for so long.
Cross-town rival SK Hynix also said last week that chip prices would improve in 2024 as clients would need to restock and manufacturers would continue to cut legacy chip production.
Samsung said its memory business would focus on cutting-edge chips and improve profitability by actively addressing demand for high-bandwidth memory and server products related to generative AI in 2024.
Mobile rebound
The mobile devices business booked a 2.73 trillion won operating profit in the fourth quarter, up from 1.7 trillion won a year earlier on stronger demand for pricier smartphones, more tablet shipments with new product releases and demand for wearable devices during the peak holiday season.
In 2023, Apple ended Samsung’s 12-year run as the world’s top seller of smartphones, snaring a 20 per cent market share as demand for premium phones outpaced that of more affordable models, according to a report from International Data Corp.
However, Samsung plans to grow annual flagship smartphone shipments at a double-digit rate in 2024 and solidify its lead in foldable phones, as competitors like Alphabet’s Google, Motorola and China’s Honor and Oppo increase their foldable offerings.
Among the businesses that remained vulnerable to weak consumer demand were Samsung’s chip contract manufacturing, TV and home appliance units. REUTERS
