Samsung profit tumbles 35% as chip weakness persists

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Samsung Electronics posted its sixth straight quarter of declining operating profit, reflecting stubbornly weak demand for consumer electronics globally.

Korea’s largest company reported a 35 per cent fall in operating income to 2.8 trillion won (US$2.1 billion), versus the 3.7 trillion won average of analysts’ estimates. Revenue came to 67 trillion won, compared with projections for 70.31 trillion won.

The results underscore how demand for smartphones and the memory chips that power modern electronics remains sluggish given economic uncertainty. In December, rival Micron Technology delivered a better-than-projected revenue outlook that suggested datacenter construction may make up for lukewarm computing and mobile device markets.

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“I think this shows that the rebound is slower than we all thought,” said Tom Kang, research director at Counterpoint Technology Market Research. “Prices are not rising that fast and the demand from certain sectors is not that strong.”

Samsung in October predicted the long-depressed US$160 billion memory market will bounce back gradually in 2024, driven by a boom in AI development. Prices should start climbing out of troughs around the latter part of 2023, executives said at the time.

The company will release a full earnings report, with divisional breakdowns, on January 31.

Samsung now aims to catch up with rival SK Hynix in the burgeoning field of high-density memory chips, where it plans to increase capacity by 2.5 times in 2024. HBM, an advanced chip that handles data more quickly, works with hardware such as Nvidia’s accelerators to speed up data processing for intensive tasks like training AI models.

Samsung is also counting on a new line-up of devices and foldables to drive growth in 2024. The Korean company is preparing to unveil its latest gadgets in the US later this month, at a time investors worry Apple’s iPhone 15 may be running out of steam mere months after launch.

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