Samsung's semiconductor slump sees it post worst profit in 15 years

Samsung Electronics' booth at the IAA Mobility show in 2023, which was held in Germany [JOONGANG PHOTO]

Samsung Electronics recorded an 84.9 percent yearly decline in operating profit last year with the annual losses from its semiconductor business totaling 14.9 trillion won ($11.3 billion).

The tech giant anticipated a turnaround of the semiconductor sector in the first quarter of this year as the price downturn, triggered by a supply glut, is expected to have run its course.

The Suwon, Gyeonggi-based tech giant announced Wednesday that it posted an operating profit of 6.6 trillion won in 2023, its lowest number since 2008 and below the market consensus of 7.5 trillion won.

Its sales came in at 259 trillion won, down 14.3 percent from over a year ago.

In the fourth quarter, it logged 2.8 trillion won in operating profit, a 34.4 percent drop from a year before.

Its profit missed the market expectation of 3.7 trillion won, compiled by market tracker FnGuide. Its fourth-quarter revenue came at 67.8 trillion won, a 3.8 percent year-on-year drop.

By division, its semiconductor business reported 2.2 trillion won of losses as it is yet to recover from the severe market downturn from last year. The company said its dynamic random-access memory (DRAM) business, however, turned to profit in the fourth quarter on the back of inventory reduction and increased sales for server use.

Among those in demand is high-end bandwidth memory (HBM), a high-end type of DRAM used for training the latest AI systems, with the product range growing 3.5 times in the final quarter on year based on bit growth.

Samsung will “complete mass production preparation for HBM3E in the first half of this year,” the company said during a conference call on Wednesday, with a plan to mass produce HBM4, a successor to HBM3E, in 2026.

On the other hand, its other chip businesses like NAND flash chips and the LSI segment covering system-on-chips and sensors are still struggling to turn to profit.

Its smartphone and network equipment sector posted 2.7 trillion won of operating profit, up 60.1 percent on year.

The consumer electronics segment covering televisions and other home appliances turned to a loss in the fourth quarter, losing 50 billion won.

The downbeat result is attributed to the post-pandemic slump in electronic devices and hefty competition with its local rival LG and price-cutting Chinese competitors.

The panel-making business, whose financial results are derived from Samsung Display, registered an all-time high operating profit of 2.01 trillion won during the fourth quarter thanks to robust demand for its small-sized OLED panels used in Apple’s iPhone 15 series.

Samsung-owned Harman reported 340 billion won of operating profit, a 0.02 percent year-on-year drop.

Going forward, the company expected its businesses to recover this year with a possible rebound of consumer sentiment, especially in the latter half of this year.

BY PARK EUN-JEE, JIN EUN-SOO [park.eunjee@joongang.co.kr]