Samsung Electronics, a global giant in memory chips, smartphones, and televisions, reported its weakest annual earnings in over a decade. The company's net profit plummeted by a staggering 73% in the final quarter of 2023. Despite this, the flagship semiconductor business showcased signs of recovery, narrowing losses due to the surge in demand fueled by the artificial intelligence (AI) boom.
In the fourth quarter, Samsung's net profit stood at 6.345 trillion won (approximately $4.77 billion), a significant decline from 23.842 trillion won a year earlier. The memory-chip segment, which had been in the red for four consecutive quarters, showed improvement, with losses narrowing to 2.180 trillion won.
For the full year, Samsung reported a 14% decline in revenue, an 85% plunge in operating profit—the lowest since 2009—and a 72% drop in net profit—the lowest since 2011. The company highlighted that its DRAM business turned profitable in the final quarter of 2023, sparking optimism for further improvement as semiconductor prices rise.
Samsung's recent release of the Galaxy S24 flagship smartphones, featuring generative AI features, marked a significant embrace of new technology. Preorders for the Galaxy S24 in South Korea reached a record 1.21 million units in the first week, despite Samsung grappling with declining smartphone sales.
In contrast, Samsung's Korean rival, SK Hynix, reported positive operating profit last quarter after four consecutive quarters of losses. The memory-chip market is showing signs of thawing, driven by increased demand from artificial intelligence. SK Hynix has emerged as a leader in memory chips used in AI applications, such as high bandwidth memory (HBM). The latest generation, HBM3, saw sales more than quintuple year over year.
Industry tracker TrendForce predicts an 18% to 23% increase in contract prices for DRAM this quarter, primarily due to the growing demand for high-priced products like HBM. SK Hynix is expected to continue improving its margins, with both SK Hynix and Samsung likely to compete in the HBM market in 2024.
SK Hynix, having doubled its stock value since the beginning of 2023, aims to position itself as the "total AI memory provider." However, challenges persist, especially with Samsung, a formidable competitor, closely trailing its advancements. As both companies navigate the dynamic landscape of the memory-chip market, the year ahead promises intense competition and technological evolution.
