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Samsung Hopes For Recovery in 2024 after Record Drop In Profit

Samsung expects mobile and PC makers to use newer chips in their devices as older servers get replaced, together aiding gradual demand recovery

Samsung plans an in-house global research unit to combat semiconductor shortage

Samsung reported a 34% drop in the fourth-quarter profit despite a memory price rebound. This can be attributed to the weak consumer demand in many businesses. However, it has flagged a continued recovery in memory chip and tech demands in 2024. With the expansion of artificial intelligence, Samsung expects mobile and PC makers to place better chips in its devices while also stating the need to replace older servers as that would also aid in gradual demand recovery.

“In 2024, the memory business expects the market to continue to recover despite various potential obstacles, including interest rate policies and geopolitical issues,” Samsung said in a statement.

Samsung said operating profit fell to 2.8 trillion won ($2.11 billion) in October-December, versus 4.3 trillion won a year earlier.

SK Hynix, Samsung’s crosstown rival also said that the last week chip prices would improve as the clients will eventually need to restock and manufactures would eventually need to continue to cut legacy chip productions.

Samsung stated that the memory business it is currently involved in will focus on the cutting-edge chips which would include high bandwidth memory (HBM) and server products used for generative AI this year.

Samsung is looking to catchup with SK Hynix in terms of memory chips used for generative AI. In 2023, Samsung held its capital spending steady to expand production capacity of those chips while SK Hynix and Micron cut investment.

While Samsung is working to bring yields for its HBM3 and future HBM3E products, SK Hynix was the first to develop the latest version called HBM3 and has a AI-chip leader Nvidia as a client.

“Given it said it is set to produce those advanced chips in the first half of this year, the market will be watching for how much of a meaningful presence Samsung can secure this year,” said Ko Yeongmin, analyst at Daol Investment & Securities.

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