By Joyce Lee and Heekyong Yang
SEOUL (Reuters) -Samsung Electronics flagged a continued restoration in reminiscence chips and tech demand in 2024, after reporting a 34% drop in fourth-quarter revenue regardless of a reminiscence worth rebound as client demand remained weak in lots of companies.
The world’s greatest maker of reminiscence chips stated it anticipated cellular and PC makers to put extra, higher chips in units as use of synthetic intelligence expands, whereas the necessity to exchange older servers would additionally support a gradual demand restoration.
“In 2024, the reminiscence enterprise expects the market to proceed to get well regardless of numerous potential obstacles, together with rate of interest insurance policies and geopolitical points,” Samsung (KS:) stated in a press release.
Samsung stated working revenue fell to 2.8 trillion received ($2.11 billion) in October-December, versus 4.3 trillion received a yr earlier.
For the complete yr, its chip enterprise swung to a file lack of 14.9 trillion received in 2023 from a 23.8 trillion received revenue a yr earlier, hit by an unprecedented downturn attributable to weak demand for devices that use chips.
Nevertheless, fourth-quarter losses shrank to 2.18 trillion received within the fourth quarter, decrease than each different quarterly loss in 2023 within the enterprise that has traditionally been Samsung’s money cow as Chinese language PC and cellular makers started to restock chips and reminiscence chip costs rebounded.
Cross-town rival SK Hynix additionally stated final week chip costs would enhance this yr as shoppers would wish to restock and producers would proceed to chop legacy chip manufacturing.
Samsung stated its reminiscence enterprise would concentrate on cutting-edge chips together with excessive bandwidth reminiscence (HBM) and server merchandise used for generative AI this yr.
Trying to meet up with SK Hynix in reminiscence chips used for generative AI, Samsung held its 2023 capital spending regular on the earlier yr partly to increase manufacturing capability of these chips, whereas SK Hynix and Micron (NASDAQ:) lower funding.
SK Hynix was first to develop the newest model referred to as HBM3 and has AI-chip chief Nvidia (NASDAQ:) as a consumer, however Samsung is working to carry yields up for its HBM3 and future HBM3E merchandise, analysts stated.
“Given it stated it’s set to provide these superior chips within the first half of this yr, the market shall be watching for the way a lot of a significant presence Samsung can safe this yr,” stated Ko Yeongmin, analyst at Daol Funding & Securities.
MOBILE REBOUND
The cellular units enterprise booked a 2.73 trillion received working revenue within the fourth quarter, up from 1.7 trillion received a yr earlier on stronger demand for pricier smartphones, extra pill shipments with new product releases and demand for wearable units through the peak vacation season.
In 2023, Apple (NASDAQ:) ended Samsung’ 12-year run because the world’s prime vendor of smartphones, snaring a 20% market share as demand for premium telephones outpaced these of extra inexpensive fashions, in response to a report from Worldwide Knowledge Corp.
Nevertheless, Samsung plans to develop annual flagship smartphone shipments at a double-digit fee this yr, helped by its newest premium smartphones with AI capabilities in a push to problem Apple.
It additionally plans to solidify its lead in foldable telephones, as opponents like Alphabet (NASDAQ:)’s Google, Motorola (NYSE:) and China’s Honor and Oppo improve their foldable choices.
Among the many companies that remained susceptible to weak client demand had been Samsung’s chip contract manufacturing, TV and residential equipment items.
Samsung’s share worth fell 1.4% in morning commerce versus a 0.3% drop within the benchmark index after earnings outcomes from its prospects Microsoft (NASDAQ:), Alphabet and AMD (NASDAQ:) missed expectations, analysts stated.
Its shares rose 42% in 2023 on expectations of improved reminiscence chip demand however have fallen about 5% year-to-date.
($1 = 1,328.5300 received)