Samsung Electronics’ chip business records losses in Q4

[Photo by Yonhap]

Samsung Electronics Co. posted over 2.18 trillion won ($1.64 billion) in losses in the chip business in the fourth quarter of 2023, despite the company’s DRAM business returning to profitability after a year and narrowing quarterly chip losses by over 1.5 trillion won from the previous quarter.

According to the electronics giant on Wednesday, the company’s operating profit stood at 2.82 trillion won in the fourth quarter, down 34.4 percent year-on-year. The figure is also 28 percent below the market consensus compiled by Yonhap Infomax.

The company’s fourth-quarter revenue and net profit were 67.78 trillion won and 6.34 trillion won respectively.

By division, the Device Solutions (DS) division, responsible for chips, posted 21.69 trillion won in revenue with an operating loss of 2.18 trillion won.

The loss in the chip business lessened notably due to memory production cuts and stabilized prices, but the annual semiconductor loss totaled 14.87 trillion won including losses from the preceding quarters.

The memory sector recovered as demand increased for personal computers and mobile devices, and particularly for artificial intelligence servers.

High-bandwidth memory and advanced process products like DDR5 and LPDDR5X boosted growth, while DRAM returned to profitability for the first time since recording losses in the first quarter of 2023.

Its System Large Scale Integration (LSI) sector saw improved revenue and profit on increased smartphone component demand, and also due to the incorporation of the Exynos 2200 chipset in the Galaxy S24 series.

In the meantime, the foundry sector continued its struggles with lower market demand but enjoyed a substantial order intake. The Device Experience (DX) division recorded 39.55 trillion won in revenue and 2.62 trillion won in operating profit in Q4, while the Mobile Experience (MX) division witnessed revenue and profit declines from the previous quarter due to slowing smartphone sales from new model impacts. The TV and home appliance business faced sluggish demand amid heightened competition.

The fourth-quarter CAPEX amounted to 16.4 trillion won, with 14.9 trillion won allocated for chips and 800 billion won for displays, mirroring the previous year’s full-year expenditure of 53.1 trillion won.

Annually, the company reported operating profit of 6.57 trillion won for the year, marking an 84.86 percent decline from the previous year. It is the first time in 15 years that the company’s annual operating profit dropped below 10 trillion won. Its annual revenue saw a 14.33 percent fall year-on-year to 258.94 trillion won, with net profit falling 72.17 percent to 15.49 trillion won.