Samsung Electronics Semiconductor Deficit Improves... DRAM Returns to Profit After One Year
by Kim HyeongMin
Published 31 Jan.2024 09:27(KST)
Annual Operating Profit 6.5 Trillion KRW · Revenue 258.9 Trillion KRW
Annual Operating Profit Drop Below 10 Trillion KRW for First Time in 15 Years Since Global Financial Crisis
Quarter-on-Quarter Semiconductor Loss Improved by Over 1.5 Trillion KRW
Samsung Electronics announced on the 31st that it recorded an operating profit of 6.567 trillion KRW and sales of 258.9355 trillion KRW on a consolidated basis last year. This represents a decrease of 84.86% and 14.33%, respectively, compared to the previous year. It is the first time in 15 years since the global financial crisis (6.0319 trillion KRW in 2008) that Samsung Electronics' annual operating profit fell below 10 trillion KRW.
In the semiconductor business in the fourth quarter of last year, Samsung Electronics posted a loss of over 2 trillion KRW, bringing the annual semiconductor loss to 15 trillion KRW. However, due to the recovery of the memory market in the second half of last year, DRAM successfully returned to profitability after one year, reducing the semiconductor loss by more than 1.5 trillion KRW compared to the previous quarter, brightening the outlook for the first half of this year.
According to Samsung Electronics on the day, the Device Solutions (DS) division, which is responsible for the semiconductor business, recorded sales of 21.69 trillion KRW and an operating loss of 2.18 trillion KRW in the fourth quarter of last year. The semiconductor business's loss significantly decreased compared to the previous quarter as the effect of memory production cuts took full effect and the price decline halted. However, including losses from the first to third quarters of last year, the semiconductor loss over the past year amounted to approximately 14.87 trillion KRW.
Memory showed an overall demand recovery as customer inventory normalized, memory content in PC and mobile products increased, and demand for generative artificial intelligence (AI) servers grew. As a result of expanding sales of advanced process products such as High Bandwidth Memory (HBM), DDR5, LPDDR5X, and UFS4.0, Samsung Electronics recorded bit growth (production increase rate converted to bit units) above the market average, and DRAM greatly improved inventory levels, returning to profitability four quarters after a loss in the first quarter of last year.
System LSI saw increased component purchase demand as smartphone inventory adjustments were completed, and both sales and profits improved compared to the third quarter due to the Galaxy S24 featuring the 'Exynos 2400'. Although the foundry business continued to experience poor performance due to decreased market demand, it achieved its highest annual order record. The Device Experience (DX) division recorded sales of 39.55 trillion KRW and an operating profit of 2.62 trillion KRW in the fourth quarter.
On the other hand, annual sales decreased by 14.33% to 258.9355 trillion KRW compared to the previous year. Net profit fell by 72.17% to 15.4871 trillion KRW. Operating profit in the fourth quarter last year was 2.8247 trillion KRW, down 34.4% from the same period last year. Fourth-quarter sales and net profit were 67.7799 trillion KRW and 6.3448 trillion KRW, respectively.
The Mobile Experience (MX) division, responsible for smartphones, saw a decline in sales and profits compared to the previous quarter as the effect of new model launches weakened and smartphone sales decreased. The TV and home appliance businesses struggled due to intensified competition amid declining demand.
Samsung Electronics' capital expenditure in the fourth quarter of last year was 16.4 trillion KRW, of which 14.9 trillion KRW was for semiconductors and about 800 billion KRW for displays (SDC). On an annual basis, capital expenditure remained the same as last year at 53.1 trillion KRW.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.