After reporting a year-on-year drop of 34% in revenue from memory chips in the fourth quarter of 2023, Korean electronics giant Samsung is on a recovery journey in the chips and tech department.
Samsung says that it expects increased demand for new chipsets as mobile and PC makers are placing better and more efficient memory chips to support artificial intelligence technology in their devices, while there is also a need to replace older servers.
Samsung’s Chip Business On The Road To Recovery Following Abysmal Q4 Sales
In a statement released on Tuesday, Samsung said that its memory business anticipates the market to continue to recover in 2024 despite various potential obstacles, including interest rate policies and geopolitical issues.
The tech giant noted that its operating profit fell from $3.2 billion in October-December 2022 to $2.09 billion in the same period last year. However, the numbers are in line with Samsung’s estimate of $2.5 billion flagged earlier this month.
However, Samsung’s chip business swung to a record loss of $10 billion in 2023 from a profit of $20.9 billion in 2022. The unit was hit by an unprecedented downturn caused by weakened demand for smartphones and other gadgets that use memory chips.
Interestingly, Samsung’s chip losses in Q4 2023 were less compared to every other quarter of the year for its chip business which has historically been one of the company’s cash cow.
Samsung’s chip business had its losses shrink from $2.8 billion in Q3 2023 to $1.64 billion in the following quarter as memory chip prices rebounded. This was a result of Chinese PC and mobile makers starting to restock memory chips in Q4 after depleting their stocks.
Chief rivals SK Hynix also said last week that chip prices would improve this year as clients would need to restock and manufacturers would continue to cut legacy chip production.
Samsung To Focus On AI-Powered Chips As PC And Mobile Makers Release Newer Devices
Samsung noted that it would be focusing on developing cutting-edge chips and improving profitability by actively addressing the demand for high-bandwidth memory (HBM) and server products related to generative AI in 2024.
Meanwhile, the Korean multinational’s largest business, mobiles, recorded a $2 billion operating profit in the fourth quarter of 2023. This figure was up from $1.29 billion same time in 2022 due to stronger demand for pricier smartphones, more shipments of tablets, new product releases, and increased demand for wearables during the Christmas holiday season.
However, 2023 was not a good year for Samsung after Apple ended its 12-year run as the world’s top seller of smartphones. According to a report from the International Data Corp, Cupertino managed to snare 20% of Samsung’s market share as demand for premium smartphones outpaced that of more affordable models.
Samsung has plans to grow its annual flagship smartphone shipments at a double-digit rate this year while also solidifying its lead in the foldable smartphone business. Google, Motorola, Honor, and Oppo are now offering foldables in their mobile lineup, taking the competition up to Samsung’s neck.
Among Samsung’s businesses that experienced weak consumer demand last year were chip contract manufacturing, TV, and home appliances units.
