Samsung Forecasts Dip in Q4 Revenue Despite Chip Price Upsurge

Samsung Electronics projected a 4.9 percent revenue decrease to 67 trillion won in the fourth quarter of 2023 compared to the same period the prior year, revealing a likely 35 percent plunge in operating profit.
Galaxy S23 from SamsungThis announcement, disclosed on Tuesday, signaled sustained weakness across its chip, TV, and home appliance divisions, despite improved chip prices, Reuters news report said.

The Korea-based technology giant estimated its operating profit to have shrunk to 2.8 trillion won ($2.13 billion) between October and December, down from 4.31 trillion won a year earlier, in a concise preliminary financial statement . Detailed earnings are slated for release on January 31, 2024.

Though these figures reflect a weaker performance, it marks Samsung’s smallest year-on-year profit decline in five quarters. The company faced a challenging market in 2022 due to a chip oversupply and sluggish demand for gadgets, leading to a 31 percent drop in Q3 profits.

Analysts anticipate a memory chip market recovery this year following increased chip prices in the December quarter after production cutbacks, with this trend expected to persist.

Samsung’s chip division is speculated to have narrowed its Q4 losses compared to the substantial deficits reported in the second and third quarters. The upturn is attributed to improved memory chip earnings, especially in the DRAM business, which returned to profitability.

Research firm TrendForce indicates an estimated 18 percent-23 percent surge in mobile DRAM chip prices and a 10 percent-15 percent rise in mobile NAND flash chip prices during the fourth quarter of 2023.

However, despite these positive shifts in chip pricing, Samsung might have fallen short of market expectations due to lower-than-anticipated profits in its non-memory chips, television, and home appliance sectors, according to analysts.

Meanwhile, competitor LG Electronics predicted a fourth-quarter operating profit of 313 billion won, citing intense competition in television and home appliance markets amidst slow consumer demand recovery from high inflation.

Samsung’s mobile business also faced challenges, with analysts projecting a decline in shipments of its flagship foldable models by about 1 million units each compared to the previous quarter, resulting in a marginal earnings decrease.