Samsung has recently seen a decline in its profits for the fourth consecutive quarter, concluding a tough year marked by the loss of its title as the leading smartphone manufacturer globally.
The tech giant from South Korea reported a 35% decrease in profit, underlining a subdued demand for consumer devices and their corresponding chips. In the December quarter, the company’s operating profits dropped to 2.8 trillion won (nearly $2.1 billion), in contrast to 4.3 trillion won ($3.5 billion) from the previous year, which was consistent with its earlier earnings projection.
In spite of this, Samsung remains confident about a potential resurgence in mobile device demand in the coming year. The company expressed its expectation for an upward trend in the smartphone market in 2024, particularly with the introduction of new products such as AI-powered smartphones which are expected to stimulate an increase in demand.
Previously the dominant force in smartphone sales, Samsung was surpassed by Apple (AAPL) in the fourth quarter, a time of peak retail activity due to the year-end holiday shopping season. According to IDC, the iPhone maker held a global market share of 20.1% in 2023, slightly above Samsung’s 19.4%. The company acknowledged a decline in smartphone sales during the fourth quarter, but observed an increase in demand for high-end smartphones compared to the previous three months. Additionally, tablet sales surged following the introduction of new products.
Despite Samsung’s position as the world’s largest memory chip maker, it has faced challenges due to a historic supply shortage during the pandemic. Consumer demand for electronics has remained weak, resulting in decreased demand for semiconductors. This has led to substantial losses for Samsung.
In its 2023 earnings report, the firm reported a loss of 14.9 trillion won (around $11.2 billion) for its device solutions unit, including the memory chip business, compared to a profit of 23.8 trillion won ($17.8 billion) the previous year. Looking ahead, Samsung expects a gradual recovery in the market this year, despite potential challenges such as interest rate policies and geopolitical issues.
In the fourth quarter, Samsung managed to command higher prices for memory chips compared to the previous quarter, showing an improvement in performance. However, the company cautioned that it will continue to face challenges as global economic uncertainties are expected to impact business in the near term. Samsung anticipates a moderate improvement in earnings in the first half of 2024, with a more significant improvement forecasted for the second half of the year.
As a result of these announcements, Samsung shares fell by 1.6% in Seoul on Wednesday.
