Presentation of the new Samsung S24 smartphones, January 15, 2024 in Seoul (AFP/Archives/Jung Yeon-je)
South Korean giant Samsung Electronics announced on Wednesday a sharp drop in profits in 2023, but forecasts a rebound in demand this year thanks to the boom in artificial intelligence.
Between October and December 2023, Samsung’s operating profit fell 34.57% year-on-year to 2.82 trillion won (1.96 billion euros), the group said in a press release.
Revenue for the same period fell 3.8 percent year-on-year to 67.78 trillion won, and net profit fell 73.4 percent to 6.34 trillion won.
Samsung, one of the world’s largest makers of memory chips and smartphones, blamed weak demand for consumer electronics in 2023 on inflation.
But the group said it was optimistic for 2024, a year in which it expects “the gradual recovery of demand for smartphones and computers” thanks to the expansion of artificial intelligence (AI) on devices. This is despite “various potential obstacles, including interest rate policies and geopolitical issues”.
Samsung is one of the few companies manufacturing high-quality, high-bandwidth memory (HBM) chips designed for AI processors.
– Battle against Apple –
In early January, the company launched its new Galaxy smartphones with new AI features, continuing its battle to regain the position of the world’s largest smartphone seller from Apple.
Samsung CEO Han Jong-Hee on January 8, 2024 at CES in Las Vegas (AFP/Archives/Frederic J. BROWN)
The group also announced its results for the whole of 2023 on Wednesday, including an operating profit of 6.56 trillion won, a fall of 84.9% year-on-year.
On the Seoul Stock Exchange, Samsung Electronics shares were down 1.08% in the morning.
Samsung publishes its quarterly results after the South Korean SK Hynix, the world’s second largest manufacturer of memory chips, which for its part announced that it had returned to profit after four consecutive quarters of losses.
According to the South Korean news agency Yonhap, Sam Altman, CEO of OpenAI creator of ChatGPT, met with executives from Samsung and SK Hynix in South Korea last week.
– Giant chip factory –
In March 2023, the South Korean government announced the construction of the “world’s largest chip manufacturing hub” in the Seoul area thanks to $230 billion in private investment mainly from Samsung Electronics.
“The strong demand for AI and in particular generative AI is in turn driving strong demand for advanced semiconductor systems, from computing to memory,” Neil Shah, vice-president, told AFP. president of Counterpoint Research.
Presentation of the new Samsung Galaxy S24 smartphones, January 15, 2024 in Seoul (AFP/Archives/Jung Yeon-je)
Samsung’s results reflect a “more gradual recovery than initially expected”, believes this analyst. But several positive trends, such as escalating DRAM prices and the recovery seen in the smartphone market, promise a brighter future, he said.
“Samsung is strategically positioned to thrive in changing market conditions,” summarizes Mr. Shah.
South Korean electronics groups, led by Samsung, have recorded record profits in recent years thanks to soaring prices of their products. But the global economic downturn put an end to the party.
After surging during the pandemic, when consumers flocked to smartphones and computers to telework and entertain themselves during lockdowns, demand faltered with the end of health restrictions, then fell further due to the galloping inflation and rising interest rates.
Nevertheless, the global semiconductor market is expected to recover in 2024 and grow by 11.8%, according to estimates from industry research organization World Semiconductor Trade Statistics.
“Memory chips are just emerging from their downward cycle, and Samsung’s overall operating performance will improve this year,” as “demand and supply reach a better balance,” Gloria Tsuen predicted to AFP, vice president and chief credit officer at Moody’s Investors Service.
“Samsung has a significant net cash position, which gives it a solid financial cushion,” she explained.
© 2024 AFP
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