Samsung Electronics, the South Korean tech giant, is bracing itself for a significant drop in operating profit for the fourth quarter of 2023, with expectations not being met. The company is estimating an operating profit of 2.8 trillion South Korean won ($2.13 billion), a 35% decrease from the previous year’s 4.31 trillion won. Furthermore, fourth-quarter revenue is expected to have fallen by 4.9% to 67 trillion won.
This decline in profit can be attributed to several factors. Firstly, declining memory chip prices have contributed to the unsatisfactory earnings. Additionally, weak demand for smartphones and laptops has further impacted revenue. Lastly, Samsung has faced challenges in terms of lower yields compared to its competitors.
However, there is hope for a recovery in the semiconductor market. Analysts are predicting a rebound in memory chip prices in 2024, which should drive an overall improvement in the industry. These predictions are based on expectations of production cuts and a recovery in demand for mobile and PC devices, leading to a stabilization of memory chip prices.
This latest development comes after a tough year for Samsung. The company reported a 77.6% plunge in operating profit for the third quarter of 2023 compared to the previous year. Furthermore, the second quarter of 2023 saw a staggering 95% decrease in operating profit compared to the same period in 2022.
Despite these setbacks, there is optimism for the future. Samsung, along with SK Hynix, another major memory chip manufacturer, is expecting further price hikes and an earnings rebound for memory makers in 2024. These positive projections are driving anticipation for a potential increase in share prices in the near future.
In conclusion, Samsung Electronics is bracing for a significant drop in operating profit for the fourth quarter of 2023. The decline is primarily due to falling memory chip prices, weak demand for smartphones and laptops, and lower yields compared to competitors. However, analysts are hopeful for a recovery in the semiconductor market in 2024, with expectations of a rebound in memory chip prices. This could potentially lead to improved earnings and share prices for Samsung in the near term.