Samsung Sees Smartphone and Tech Units Demand Recovering in 2024 After Report Chip Loss

Samsung Electronics flagged a continued restoration in reminiscence chips and tech demand in 2024, after reporting a 34 p.c drop in fourth-quarter revenue regardless of a reminiscence value rebound as client demand remained weak in lots of companies.

The world’s greatest maker of reminiscence chips mentioned it anticipated cell and PC makers to position extra, higher chips in units as use of synthetic intelligence expands, whereas the necessity to exchange older servers would additionally support a gradual demand restoration.

“In 2024, the memory business expects the market to continue to recover despite various potential obstacles, including interest rate policies and geopolitical issues,” Samsung mentioned in a press release.

Samsung mentioned working revenue fell to KRW 2.8 trillion ($2.11 billion or roughly Rs. 17,522 crore) in October-December, versus KRW 4.3 trillion (roughly Rs. 26,790 crore) a 12 months earlier.

For the complete 12 months, its chip enterprise swung to a report lack of KRW 14.9 trillion in 2023 (roughly Rs. 92,845 crore) from a KRW 23.8 trillion (roughly Rs. 1,48,273 crore) revenue a 12 months earlier, hit by an unprecedented downturn attributable to weak demand for devices that use chips.

However, fourth-quarter losses shrank to 2.18 trillion received within the fourth quarter, decrease than each different quarterly loss in 2023 within the enterprise that has traditionally been Samsung’s money cow as Chinese PC and cell makers started to restock chips and reminiscence chip costs rebounded.

Cross-town rival SK Hynix additionally mentioned final week chip costs would enhance this 12 months as purchasers would want to restock and producers would proceed to chop legacy chip manufacturing.

Samsung mentioned its reminiscence enterprise would deal with cutting-edge chips together with excessive bandwidth reminiscence (HBM) and server merchandise used for generative AI this 12 months.

Looking to meet up with SK Hynix in reminiscence chips used for generative AI, Samsung held its 2023 capital spending regular on the earlier 12 months partly to broaden manufacturing capability of these chips, whereas SK Hynix and Micron lower funding.

SK Hynix was first to develop the newest model referred to as HBM3 and has AI-chip chief Nvidia as a shopper, however Samsung is working to carry yields up for its HBM3 and future HBM3E merchandise, analysts mentioned.

“Given it said it is set to produce those advanced chips in the first half of this year, the market will be watching for how much of a meaningful presence Samsung can secure this year,” mentioned Ko Yeongmin, analyst at Daol Investment & Securities.

Mobile rebound

The cell units enterprise booked a 2.73 trillion received working revenue within the fourth quarter, up from 1.7 trillion received a 12 months earlier on stronger demand for pricier smartphones, extra pill shipments with new product releases and demand for wearable units throughout the peak vacation season.

In 2023, Apple ended Samsung’ 12-year run because the world’s high vendor of smartphones, snaring a 20 p.c market share as demand for premium telephones outpaced these of extra inexpensive fashions, based on a report from International Data Corp.

However, Samsung plans to develop annual flagship smartphone shipments at a double-digit charge this 12 months, helped by its newest premium smartphones with AI features in a push to problem Apple.

It additionally plans to solidify its lead in foldable telephones, as rivals like Alphabet’s Google, Motorola and China’s Honor and Oppo enhance their foldable choices.

Among the companies that remained susceptible to weak client demand have been Samsung’s chip contract manufacturing, TV and residential equipment items.

Samsung’s share value fell 1.4 p.c in morning commerce versus a 0.3 p.c drop within the benchmark index after earnings outcomes from its prospects Microsoft, Alphabet and AMD missed expectations, analysts mentioned.

Its shares rose 42 p.c in 2023 on expectations of improved reminiscence chip demand however have fallen about 5 p.c year-to-date.

© Thomson Reuters 2024