Samsung is the world’s greatest maker of reminiscence chips.
Jakub Porzycki | Nurphoto | Getty Photos
Samsung Electronics on Tuesday mentioned it expects to put up a 35% drop in working revenue within the fourth quarter of 2023, lacking expectations by a large margin as a rebound in semiconductor costs seemingly narrowed losses within the South Korean firm’s greatest profit-driving section.
Samsung mentioned that for the October-December quarter, working revenue is more likely to be 2.8 trillion South Korean gained ($2.13 billion), down 35% from the identical interval a yr in the past the place the agency reported an working revenue of 4.31 trillion gained. Working revenue was 2.43 trillion gained within the earlier quarter.
The revenue steering fell far in need of LSEG’s SmartEstimate of three.7 trillion gained, which is weighted extra closely towards expectations of analysts who’ve been persistently extra correct.
Fourth-quarter income seemingly fell 4.9% from the identical interval a yr in the past to 67 trillion gained, the agency mentioned within the assertion.
Samsung is the world’s largest maker for dynamic random-access reminiscence chips that are present in shopper units equivalent to smartphones and computer systems.
“We estimate reminiscence costs began to rebound from 4Q23, pushed by manufacturing cuts by suppliers and a restoration in demand for cell and PC,” mentioned SK Kim, analyst at Daiwa Capital Markets, in a Jan. 4 report.
Reminiscence chip costs fell drastically final yr, because of extra inventories post-Covid and weak demand for finish merchandise like smartphones and laptops.
This has hit Samsung’s earnings onerous. Samsung’s third quarter working revenue plunged 77.6% from a yr in the past, although it got here in higher than anticipated. Working revenue within the second quarter slumped by 95% in comparison with the identical interval a yr in the past.
The demand for AI throughout all main functions will drive the general semiconductor gross sales market to get well in 2024.
In late October, Samsung and SK Hynix – the world’s second-largest DRAM reminiscence chip maker – signaled throughout their third quarter earnings calls that weak demand might have lastly bottomed out following manufacturing cuts.
“We count on additional worth hikes in 1H24 and a marked rebound in earnings for reminiscence makers in 2H24 and 2025,” mentioned Kim of Daiwa Capital Markets, referring to the primary and second half of this yr.
“As such, we anticipate tailwinds for share costs within the close to time period.”
Reminiscence chip costs have began rising because the begin of November, due to “reminiscence producers’ strict management of provide and output,” in keeping with Galen Zeng, senior analysis supervisor of semiconductor analysis at IDC.
“The demand for AI throughout all main functions will drive the general semiconductor gross sales market to get well in 2024,” mentioned Zeng in a Dec. 21 report.
“The semiconductor provide chain, together with design, manufacturing, packaging, and testing, will bid farewell to the downturn in 2023.”
That is breaking information. Please test again for updates.
