Samsung fourth-quarter profit falls short of estimates as AI demand remains strong

Samsung Electronics on Friday reported better-than-expected fourth-quarter income, yr on yr, although its working revenue dropped sharply from the earlier quarter resulting from larger R&D bills in its chips phase.

Listed below are Samsung’s fourth-quarter outcomes in contrast with LSEG SmartEstimate, which is weighted towards forecasts from analysts who’re extra persistently correct:

Income: 75.8 trillion Korean received ($52.2 billion) vs. KRW 75.4 trillionOperating revenue: KRW 6.5 trillion vs. KRW 6.8 trillion

Income was about 12% up from the identical interval from final yr, whereas working revenue grew about 130%, yr on yr.

Nevertheless, working revenue fell almost 30% to six.5 trillion received.

Samsung shares fell 2.2% in South Korea on Friday morning.

Fourth-quarter income beat Samsung’s personal steerage of KRW 75 trillion, whereas working revenue got here according to the corporate’s forecast.

Samsung is a number one producer of reminiscence chips, that are utilized in gadgets equivalent to laptops and servers, and can also be the world’s second-largest participant within the smartphone market.

“Though fourth quarter income and working revenue decreased on a quarter-on-quarter (QoQ) foundation, annual income reached the second-highest on file, surpassed solely in 2022,” Samsung stated in its assertion.

For the complete yr, Samsung reported KRW 300.9 trillion in income and KRW 32.7 trillion in working revenue. In 2023, the corporate posted an annual income of KRW 258.94 trillion and an working revenue of KRW 6.57 trillion.

For the present quarter, Samsung stated that earnings is perhaps restricted resulting from weak point in its semiconductor enterprise however that it could pursue development by means of AI smartphones and different premium gadgets. 

“For 2025 as a complete, the Firm plans to boost technological and product benefits in AI, proceed to fulfill future demand for high-value-added merchandise and drive gross sales development in premium segments,” it added.

Samsung Electronics’ chip enterprise posted an working revenue of KRW 2.9 trillion within the fourth quarter, down over 25% from the three months ending in October, whereas its annual numbers got here in under that of SK Hynix.

This was regardless of Samsung’s reminiscence enterprise reaching a record-high fourth-quarter income of 30.1 trillion helped by demand for its superior reminiscence merchandise used for AI purposes. 

“[O]perating revenue decreased barely in comparison with the earlier quarter on account of elevated R&D bills to safe future expertise management, in addition to the preliminary ramp-up prices to safe manufacturing capability for cutting-edge nodes,” Samsung stated. 

Samsung and SK Hynix each present DRAM, or dynamic random entry reminiscence, merchandise — a sort of semiconductor reminiscence wanted for information processing. 

Nevertheless, SK Hynix has left Samsung behind in HBM, or excessive bandwidth reminiscence, a sort of DRAM, by which chips are vertically stacked to save lots of house and cut back energy consumption. 

Based on Samsung, its reminiscence enterprise is slicing down legacy merchandise to higher align with market demand and rising its proportion of excessive value-added merchandise, equivalent to HBM. 

“In 2025, total reminiscence market demand is predicted to get better from the second quarter,” Samsung stated, warning that its earnings are anticipated to stay weak within the present quarter.