Samsung forecasts 85% drop in revenue as chip gross sales falter
A employee waters a flower mattress beside the brand of Samsung Electronics on the firm’s headquarters in Suwon, Gyeonggi. [REUTERS]
Samsung Electronics forecast an 84.9 p.c yearly decline in working revenue final yr as a extreme cyclical downturn within the semiconductor trade eroded its profitability.
The Suwon, Gyeonggi-based tech big introduced in a preliminary earnings report Tuesday that expects to publish an working revenue of 6.5 trillion received ($5 billion), a quantity that’s the lowest since 2008 and beneath the market consensus of seven.5 trillion received.
The corporate initiatives an annual gross sales determine of 258.2 trillion received, down 14.6 p.c on yr. That forecast falls in need of the market estimate of 262 trillion received.
The preliminary forecast didn’t embrace detailed breakdowns.
However Kim Dong-won, an analyst at KB Securities, estimates that Samsung’s reminiscence chip enterprise generated a mixed 15 trillion received of working losses all year long, although earnings within the smartphone and panel-making companies helped the corporate stay within the black.
Specialists and market analysts each in Korea and overseas imagine the present downturn hit its backside final yr and can rebound this yr with sturdy demand anticipated within the superior AI phase.
“The reminiscence chip enterprise generated 15 trillion received of working losses in 2023, however it would seemingly publish 14 trillion received of revenue in 2024 by including 29 trillion received in whole,” Kim mentioned.
The market adjustments replicate progress that Samsung made in decreasing stock and rising shipments within the fourth quarter.
Shipments of dynamic random-access reminiscence and NAND flash reminiscence chips elevated by 30 p.c primarily based on bit development, and stock ranges had fallen by greater than 50 p.c by the tip of final yr in comparison with the start, in accordance with Kim.
Within the fourth quarter alone, Samsung Electronics’ working revenue dropped by 35 p.c to 2.8 trillion received, whereas gross sales dropped 4.9 p.c to 67 trillion received, in accordance with the early earnings consequence.
Kim Younger-gun, an analyst at Mirae Asset Securities, estimates that Samsung’s semiconductor enterprise recorded 2.2 trillion received in working loss in the course of the quarter, whereas the smartphone and community gear division posted 2.5 trillion received in revenue. The panel-making enterprise introduced in 1.9 trillion received of revenue, whereas shopper electronics made 400 billion received, in accordance with Kim of Mirae Asset Securities.
He famous that the chip sector is recovering at a slower-than-expected tempo as a result of the expansion of cargo and costs facilities round just a few high-performing semiconductors at a time when general demand for digital gadgets stays weak.
“There have been enhancements in shipments and common promoting costs, however the scale was weaker than anticipated, since a batch of high-end merchandise had been shipped first,” Kim mentioned.
The ultimate consequence will probably be introduced by the tip of this month.
BY PARK EUN-JEE [park.eunjee@joongang.co.kr]