Samsung Electronics announced on Jan. 9 that it recorded an operating profit of 28 trillion won and sales of 67 trillion won in the fourth quarter of last year. This marked a 35 percent decrease in operating profit and a 4.91 percent decrease in sales compared to the same quarter of the previous year. On an annual basis, the operating profit was 6.54 trillion won, and sales were 258.16 trillion won, representing an 85 percent and 14 percent decrease, respectively, compared to the previous year.
Samsung Electronics’ annual operating profit falling below 10 trillion won is the first time since 2008 (6.0319 trillion won).
Before the announcement, the securities industry had anticipated that Samsung Electronics would achieve an operating profit of at least 3.6 trillion won, with some forecasts reaching over 4 trillion won for the fourth quarter of last year. However, Samsung Electronics reported a lower-than-expected operating profit by 1-2 trillion won. This was attributed to increased marketing costs in the consumer and TV markets, intensified competition, and lower-than-expected demand.
Analysis also indicates that the Mobile Experience (MX) division, responsible for the smartphone business, contributed to the decrease in operating profit by selling around one million fewer flagship models such as Galaxy Fold and Galaxy Flip. Examining each business segment, it is estimated that the Semiconductor (DS) division is still recording losses, while the MX and Consumer Electronics (CE) divisions, responsible for mobile and consumer electronics, respectively, achieved operating profits of around 2 trillion won each. Samsung Display is expected to have recorded an operating profit of around 1.5 trillion won, driven by the steady increase in shipments of mobile OLED panels for Apple.
Despite challenges, positive aspects include the shift to profitability in the DRAM business, a key component of the DS division. Analysts suggest that Samsung Electronics continued its cost reduction efforts in the fourth quarter, and aggressive pricing strategies in the memory market proved effective, especially with increased demand for safe stockpiling due to the release of new products by Chinese smartphone customers.
With the emergence of advanced technologies such as on-device AI, there are also signs of recovery in NAND flash. Securities analysts predict a significant increase in fixed transaction prices for DRAM in the first quarter of 2024 and a larger increase in NAND prices compared to the fourth quarter of 2023.
The securities industry expects Samsung Electronics’ performance to enter a full recovery trend starting from the first quarter of this year. The strong trend in DRAM prices observed in the fourth quarter of last year is continuing into the first quarter, and the supply of high-value-added products such as High Bandwidth Memory (HBM) is also gaining momentum. Some investment firms forecast Samsung Electronics to achieve annual sales of 325 trillion won and an operating profit of 24 trillion won for the year.
