The predominance of negative trends in Samsung’s financial reports, which are highly dependent on the state of the memory market, did not stop investors from finding reasons for optimism. At least the company’s operating profit last quarter exceeded analysts’ expectations; they were wrong twice in forecasting the magnitude of the decline in net profit.
As explained BloombergAnalysts on average expected Samsung Electronics to post net income of $1.86 billion in its most recent quarter, but it actually came in at $4.1 billion, despite falling 40% year over year. In the last quarter, the company’s net profit fell by 86%, so reducing the decline can clearly be considered a success.
Operating profit fell 77.6% for the year to $1.8 billion, but was still ahead of market expectations. But in a sequential comparison, the company’s operating profit increased by 262.6%. Samsung’s total revenue was nearly $50 billion last quarter, falling just short of analysts’ forecasts. Year-over-year, the company’s revenue fell 12.2%. Samsung Electronics even slightly exceeded its own revenue and operating profit forecasts, which were announced this month.
In the current quarter, Samsung’s confidence in the further improvement of the situation in the memory market is strengthened by the stabilization of demand and a decrease in inflation rates, as well as the release of new products by its customers, especially in the PC and smartphone segment. In addition to new product releases, artificial intelligence systems are expected to boost memory demand this quarter.
Samsung has the largest production facilities in the world and expects to make money by increasing the production volumes of HBM3 and HBM3E memories, which are now in demand in the artificial intelligence systems segment. According to external analysts, Samsung is still allowed to supply HBM3 memory for NVIDIA’s needs in the current quarter, while previously only SK hynix tried in vain to meet NVIDIA’s needs. It is estimated that Samsung will begin shipping next-generation computing accelerators with HBM3P memory from the middle of next year. In the fourth quarter, Samsung expects memory prices to rise and demand for them to recover even faster than in the previous quarter. According to the management of the Korean company, the industry has bottomed out and memory demand in the PC and smartphone segment is beginning to recover. At the same time, this year we will have to further reduce memory production volumes, but this applies to a greater extent to NAND-type microcircuits. In addition to HBM3, the company will increase production volumes of DDR5 memory.
In the semiconductor business, Samsung reduced operating losses sequentially from $3.26 billion to $2.8 billion. With the launch of Apple iPhone 15 smartphones, Samsung is expected to significantly increase its sales in the mobile device screen panel segment.
Samsung’s profit from mobile device sales rose to $2.4 billion, but was little changed from a year ago. The flagship models of the Galaxy S24 series and the brand’s folding smartphones were particularly popular. In the mobile communications segment, demand is expected to stabilize next year, and according to Samsung management, supply volumes will grow in the double-digit percentage range.
This year, Samsung will slightly increase capital spending to $39.7 billion, but this amount will also be a record for the company. The semiconductor sector accounts for around $35.1 billion of this. Priority will be given to increasing the production of high-density memory chips such as HBM3. Next year, core production capacity is expected to increase by at least two and a half times. Samsung officials expressed hope in reporting that NVIDIA will not continue to rely on the sole provider of HBM3 memory, which continues to compete with SK Hynix. After the report was released, Samsung’s share price began to rise, but then fell 0.3%.