Samsung Electronics reported an operating profit of approximately 6.5 trillion won ($4.4 billion) for the fourth quarter of 2024, significantly below analysts’ earlier projections of $5.8 billion. This marks a steep decline from the $8.2 billion forecast in August, as market expectations continually adjusted downward amid deteriorating conditions.
Some South Korean analysts suggested the company may be navigating a cyclical low, while others warned that challenges in the semiconductor market could persist into the first half of 2025. With older DRAM supplies from China expected to increase by over 50% this year, competition in the commodity DRAM market may intensify, potentially deepening the company’s losses.
On Jan. 8, Samsung disclosed preliminary sales of $51.4 billion for the fourth quarter, representing a 5.18% decline from the previous quarter. Operating profit also dropped 29.19% quarter-over-quarter, reflecting the ongoing challenges in the market.
However, when compared to the same period last year, revenue grew 10.65%, while operating profit soared 130.5%. This sharp year-over-year increase was largely due to an exceptionally weak base in the prior year, which had seen unusually poor performance.
The non-memory semiconductor units—System LSI and Foundry—posted a combined estimated loss of $1.3 billion, dragged down by declining utilization rates and rising one-time costs. Other divisions, including memory, displays, smartphones, and home appliances, also delivered lackluster results.
According to domestic securities firms’ estimates, the DS division’s operating profit of $2.7 billion marked a slight decline from the previous quarter. While the memory unit’s operating profit remained steady at $3.8 billion, losses in Foundry and System LSI swelled to approximately $1.5 billion, dragging down overall results.
Analysts noted that demand for general-purpose memory was weaker than expected as clients, particularly in the PC and mobile sectors, resumed inventory adjustments. High-bandwidth memory (HBM) and server-grade DDR5 chips were among the few bright spots.
The rapid price drops in DRAM, NAND flash memory, and enterprise solid-state drives (SSDs) also heavily impacted Samsung’s performance. DRAM prices, which fell 2.38% in August and 17.07% in September, plummeted an additional 20.59% in November. By the end of December, prices were down 25% from the start of the year. Similarly, NAND flash prices, which started 2024 at $4.72 per unit, plunged by nearly half by year’s end.
Market researcher Lee Su-rim of DS Investment Securities noted that although one-time costs in the third quarter had raised hopes for a stronger fourth quarter, weak demand and market polarization remained problematic. “DRAM bit growth likely fell 7% from the previous quarter, and the average selling price (ASP) inched up just 1%. NAND bit growth decreased 4%, and ASP declined by 7%,” Lee said, referring to the change in the volume of memory chips sold during the quarter.
Park Yoo-ak, a researcher at Kiwoom Securities, said the depreciation of the Korean won had helped mitigate some of the losses, but non-memory and display businesses performed worse than anticipated.
“The non-memory segment likely posted an operating loss of $1.3 billionn due to reduced utilization and one-time charges. Samsung Display’s profit may have dropped 33% from the previous quarter to approximately $685 million due to intensifying competition and higher fixed costs,” Park said.
