Samsung Electronics, Earnings Bottom Expected in 1Q Next Year... Full Rebound Anticipated Thereafter

D-RAM Price Decline and TV Off-Season Impact Cause Slowdown in 1Q Next Year
Recovery Expected from 2Q Next Year with Rising D-RAM Prices and Server Demand

[Asia Economy Reporter Minwoo Lee] There is a forecast that Samsung Electronics' performance will hit its lowest point in the first quarter of next year. Although it is expected to slow down somewhat due to the decline in DRAM and NAND flash prices, it is analyzed that it will gradually improve thereafter. This is based on the judgment that the demand from customers in the memory and non-memory sectors is expected to increase significantly next year, contrary to concerns.

On the 17th, securities firms such as KB Securities and Samsung Securities maintained Samsung Electronics' target stock price at 100,000 won against this background. Although it has struggled to recover the 80,000 won level since recording 96,800 won at the beginning of the year, it is expected to rebound significantly from next year. This is based on the judgment that Samsung Electronics' performance will bottom out and rebound in the first half of next year.

According to financial information analysis firm FnGuide, the market consensus for Samsung Electronics' consolidated performance in the fourth quarter of this year is sales of 74.8294 trillion won and operating profit of 15.0484 trillion won. This represents an increase of 21.6% and 66.3%, respectively, compared to the same period last year. However, the first quarter of next year is expected to slow down somewhat. Sales are expected to be 70.9244 trillion won and operating profit 12.7122 trillion won, growing 8.5% and 35.5% respectively compared to the same period last year, but sales are expected to decrease by 5.2% and operating profit by 15.5% compared to the previous quarter. Choi Doyeon, a researcher at Shinhan Financial Investment, explained, "This is due to the decline in DRAM and NAND flash prices, reduced OLED operating rates, and the off-season for TVs."

However, performance is expected to improve starting from the second quarter of next year. In particular, the semiconductor division is expected to lead the performance improvement. Researcher Choi said, "Due to the normalization of IT supply chain disruptions, the launch of new server platforms by Intel and AMD, the transition to DDR5, and the U.S. Department of Defense's cloud transition project (JWCC), memory prices are expected to rebound in the second quarter of next year," adding, "Non-memory is expected to continuously improve quarterly performance due to new orders and price increases."

Customer demand is also expected to remain solid. As of this month, the four major North American data center companies?Amazon, Microsoft (MS), Meta (formerly Facebook), and others?are steadily increasing their memory semiconductor orders and maintaining the increased purchasing pattern, contrary to previous expectations that they would reduce orders. Kim Dongwon, a researcher at KB Securities, said, "Especially, the somewhat aggressive increase in DRAM orders next year despite the semiconductor price decline cycle can be interpreted as a positive outlook for memory semiconductor demand next year," explaining, "This is due to a 30% decrease in DRAM inventory compared to the previous quarter and proactive server investments for building metaverse (extended virtual world) platforms."

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