Samsung Electronics has recently reported a drop in profit for the fourth quarter, reflecting a challenging period for the tech giant. Analysts estimate a 14% decline in profit, reaching 3.7 trillion won compared to the previous year’s Q4 profit of 4.31 trillion won. While this decline is significant, it is the smallest drop in six quarters, indicating a potential stabilization in the semiconductor market.
One key segment for Samsung is its chip division, which is expected to show signs of recovery. Analysts project a reduction in the quarterly loss to around 1.2 trillion won. This positive shift is driven by the recovery of the DRAM chips business, which returned to profitability after consecutive quarterly losses in Q2 and Q3. The rebound in DRAM and NAND flash chip prices during Q4 has contributed to this upward trend.
The encouraging trends in DRAM and NAND prices are not only beneficial for Samsung but also bode well for the semiconductor industry as a whole. In the last quarter, mobile DRAM chip prices saw an increase of 18 to 23%, while mobile NAND flash chip prices rose by 10 to 15%. These price hikes indicate a positive trajectory for the sector, instilling optimism for a broader recovery in the upcoming year.
Samsung’s production strategy has been adapting to the changing market dynamics, particularly in the semiconductor business. In Q4, the company has demonstrated an uptick in DRAM chip production, including an increase in silicon wafers. Moreover, the aggressive selling of memory chips in Q4, particularly in comparison to competitors like SK Hynix, indicates an effort to lower inventory levels and align with market demands.
While the mobile business has faced challenges, Samsung is expected to show an operating profit of around 2.5 trillion won. However, shipments of flagship foldable models are estimated to have decreased by about 1 million units each compared to Q3. This decline in the mobile segment highlights the competitive nature of the market and the challenges faced by Samsung.
Investors eagerly await the preliminary results to be announced this week, as Samsung’s profit decline is considered a significant indicator for the entire semiconductor market. The slowdown in the profit decline is viewed as a positive signal for investors, offering a glimpse of potential stability in the semiconductor industry.
While analysts remain cautious and predict a 35% year-on-year decline in Samsung’s operating profit for the last quarter, the efforts made by Samsung in terms of memory price trends and production strategies indicate the company’s determination to balance market demands and profitability. These efforts underline the intricate challenges faced by Samsung as one of the industry giants.