Samsung Electronics reported a significant drop in operating profit on Friday compared to the previous three months due to increased R&D spending and a slowdown in its chips business. The South Korean company exceeded fourth-quarter revenue expectations but fell short of operating profit forecasts. The fourth-quarter results showed a 12% increase in revenue and a 130% growth in operating profit year-on-year. However, operating profit decreased by nearly 30% and revenue slipped by over 4% quarter-on-quarter due to market conditions and higher company expenses.
Samsung’s fourth-quarter revenue surpassed its own guidance of KRW 75 trillion, while operating profit aligned with the company’s forecast. The company is a major producer of memory chips used in laptops and servers and is the world’s second-largest player in the smartphone market. Despite the quarterly decline, Samsung achieved its second-highest annual revenue on record in 2023.
For the full year, Samsung reported revenue of KRW 300.9 trillion and an operating profit of KRW 32.7 trillion. In 2023, the company recorded annual revenue of KRW 258.94 trillion and an operating profit of KRW 6.57 trillion. Samsung anticipates limited earnings in the current quarter due to semiconductor weakness but plans to drive growth through AI smartphones and premium devices in the future.
Samsung shares dropped 2.2% in South Korea, while SK Hynix stock fell over 11% as Asian tech companies faced pressure from China’s DeepSeek AI model. Samsung’s chip business reported an operating profit of KRW 2.9 trillion in the fourth quarter, down over 25% from the previous three months. Despite achieving record-high revenue in the memory business, Samsung faced challenges in the high bandwidth memory segment compared to SK Hynix.
Samsung and SK Hynix both supply DRAM products, with SK Hynix leading in HBM technology. Analysts noted Samsung’s need to catch up in the high bandwidth DRAM market to remain competitive. Samsung is adjusting its memory business to focus on high value-added products like HBM to align with market demand. The company expects a recovery in memory market demand in 2025 but anticipates weak earnings in the current quarter.
Samsung’s mobile and networks businesses experienced a quarter-over-quarter decline in sales and profit, partly due to the impact of new flagship smartphone launches wearing off. The segment reported revenue of KRW 25.8 trillion and an operating profit of KRW 2.1 trillion in the fourth quarter. Samsung aims to boost sales with new flagship models like the Galaxy S25 series and expand its presence in the AI smartphone market to drive growth.
