Samsung Forecasted Decline in Fourth-Quarter Operating Profit
Samsung Electronics Co Ltd predicted a significant 35% downturn in its fourth-quarter operating profit, expecting a decline to approximately 2.8 trillion won ($2.13 billion) from the prior year’s 4.31 trillion won. This projection fell notably short of the expected SmartEstimate, set at 3.7 trillion won based on reliable analyst predictions.
The profit drop was primarily attributed to lackluster performance in chip contract manufacturing, mobile processors, televisions, and home appliances. Despite a positive trend in memory chip prices, persistent weak consumer demand across various sectors hindered the expected earnings.
Impact on Samsung’s Mobile Division
In the mobile division, there was a marginal earnings dip, likely influenced by a drop in shipments of its flagship foldable models, estimated at approximately 1 million units less each compared to the preceding quarter.
Samsung’s stock faced a 2.4% decline, surpassing the broader market’s 0.3% drop (.KS11).
Nevertheless, this profit decline represents Samsung’s smallest year-on-year drop in the last five quarters, albeit starting from a relatively lower base. The memory chip segment, which had previously recorded losses, showcased signs of improvement, particularly in the profitable return of the DRAM business.
The fourth quarter observed an upturn in memory chip prices—mobile DRAM chip prices surged by approximately 18%-23%, while mobile NAND flash chip prices climbed by 10%-15%, as reported by TrendForce.
Despite prevailing challenges, analysts foresee a memory chip recovery in the coming year. They anticipate unveil strategic plans aimed at stimulating greater demand for memory chips per device, potentially leveraging on-device artificial intelligence. These revelations are expected during Samsung’s detailed earnings report scheduled for Jan. 31.
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