Samsung Electronics Drifts Further from Apple... Last Year's Operating Profit Halved, Lowest in 4 Years

[Asia Economy Reporter Kim Hyewon] Samsung Electronics received a disappointing report card compared to its competitors last year, as it was directly hit by the memory semiconductor downturn. Annual operating profit fell back to the level of four years ago, and sales also contracted. This was due to the sluggish performance of the two main pillars supporting Samsung Electronics: the semiconductor and smartphone businesses. As a result, the top spot in semiconductor operating profit was handed over to Intel for the first time in three years, and the gap with Apple, which is posting record-breaking performance, widened further. ▶Related article on page 6

Samsung Electronics announced on the 30th that its consolidated financial statements showed sales of 59.88 trillion KRW and operating profit of 7.16 trillion KRW for the fourth quarter (October to December) of last year. Compared to the same period last year, sales increased by 1%, but operating profit decreased by 33.7%. Net profit recorded 5.2271 trillion KRW.

Compared to Apple, which once stood shoulder to shoulder, the performance is sluggish. Apple's sales for the same period, disclosed the day before, were $91.82 billion (approximately 108 trillion KRW), operating profit was $25.6 billion (approximately 30.2 trillion KRW), and net profit was $22.24 billion (approximately 26.1 trillion KRW). Compared to Samsung Electronics, these figures are 1.8 times, 4.2 times, and 4.9 times higher, respectively. Samsung Electronics had surpassed Apple's operating profit in Q2 2017.

Samsung Electronics' operating profit for the entire last year was 27.7685 trillion KRW, a sharp decline of 52.8% compared to the previous year. This is the lowest in four years since recording 26.4 trillion KRW in operating profit in 2015. Last year's sales were 230.4009 trillion KRW, and net profit was 21.7389 trillion KRW, down 5.48% and 51%, respectively.

The biggest cause of the poor performance is semiconductors. Looking at the performance by business division, Samsung Electronics' semiconductor division recorded sales of 64.94 trillion KRW and operating profit of 14 trillion KRW last year, down 25% and 69% respectively from the previous year. Samsung Electronics' annual semiconductor division operating profit fell below 15 trillion KRW, and it relinquished the top spot to Intel for the first time in three years, which announced its results a week earlier.

However, there is optimism that the industry has bottomed out and will rebound, as Samsung Electronics' operating profit in the fourth quarter of last year increased compared to the previous quarter, and DRAM prices are rising again. The biggest variable currently is whether the global economic slowdown signs caused by the outbreak of the novel coronavirus infection (Wuhan pneumonia) will lead to a deterioration in semiconductor demand.

This content was produced with the assistance of AI translation services.