Samsung Electronics Semiconductor, on the Verge of Turning Profitable After One Year

Samsung Electronics' semiconductor division is expected to break free from four consecutive quarters of losses since the first quarter of last year and turn a profit in the first quarter of this year.

According to the securities industry on the 17th, the consensus of earnings forecasts released by securities firms within the past month shows that Samsung Electronics' consolidated operating profit estimate for the first quarter of this year is 4.9272 trillion won. This represents an approximately eightfold (669.6%) increase compared to the first quarter of last year (640.2 billion won) and a 74.4% increase compared to the previous quarter (2.8257 trillion won).

The expected improvement in Samsung Electronics' performance this year is largely due to the Device Solutions (DS) division, which operates the semiconductor business. Previously, Samsung Electronics' DS division posted an annual loss of 14.88 trillion won last year due to a downturn in semiconductor market conditions caused by a slump in front-end IT demand.

However, there are expectations that the division will achieve profitability in the first quarter of this year. This is because prices for DRAM and NAND began to rise starting from the fourth quarter of last year, following production cuts by memory suppliers including Samsung Electronics. Additionally, as customer inventory normalizes, the memory content in PC and mobile products is increasing, and demand for generative artificial intelligence (AI) servers is growing, indicating a recovery in the market.

Kim Sun-woo, a researcher at Meritz Securities, analyzed, "The improvement in demand conditions for legacy (general-purpose) memory is exceeding expectations," adding, "The rise in legacy memory prices is leading not only to performance improvement but also to the reversal of inventory valuation loss provisions, resulting in stronger-than-expected earnings."

Samsung Electronics' DRAM division turned profitable in the fourth quarter of last year. According to market research firm Omdia, Samsung's DRAM market share in the fourth quarter of last year was 45.7% (first place), the highest since the third quarter of 2016 (48.2%). The increase in sales of high-value-added products such as Double Data Rate (DDR) 5 and High Bandwidth Memory (HBM) contributed to this. It is expected that the memory business division, including DRAM and NAND, will turn profitable in the first quarter of this year, leading to improved performance.

Kim Dong-won, a researcher at KB Securities, forecasted, "Samsung Electronics' memory semiconductor operating profit for the first quarter of this year is expected to improve by 2.3 trillion won from the previous quarter to 1.1 trillion won," adding, "This is expected to mark a return to profitability after six quarters since the third quarter of 2022."

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