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Samsung building in Seoul.
Hong Kong
CNN
—
Samsung on Wednesday ended a disastrous year that saw it lose its position as the world’s top smartphone maker with its fourth straight quarter of declining profits.
The South Korean tech giant posted a 35% drop in profits on Wednesday, a sign that demand for consumer devices and the chips that power them remains weak.
The company announced that operating profit for the December quarter fell to 2.8 trillion won (approximately $2.1 billion). 4.3 trillion won ($3.5 billion) This is about the same as in the same period last year, and is roughly in line with the earnings forecast announced earlier this month.
Nevertheless, Samsung is optimistic that demand for mobile devices will revive this year.
The company told investors that it expects the smartphone market to recover in 2024, and that it expects new product launches, particularly AI-powered smartphones, to “drive improved demand.”
Samsung also long was the world’s top seller of smartphones, but it was overtaken by Apple (AAPL) in the fourth quarter, typically a peak period for retailers due to the holiday season.
According to market research firm IDC, the iPhone maker will account for 20.1% of the global market share in 2023, slightly ahead of Samsung’s 19.4%.
The South Korean company acknowledged a “decrease in smartphone sales” in the fourth quarter, but noted that demand for high-end smartphones had recovered compared to the previous three months. Sales of tablets also surged as customers were attracted to new product launches, the company said.
samsung is battling headwinds on a variety of fronts. Demand for semiconductors has declined over the past year as consumer demand for electronics remains weak against a backdrop of global economic uncertainty following historic supply shortages caused by COVID-19. As a result, Samsung, the world’s largest memory chip maker, suffered huge losses.
The company announced Wednesday that its device solutions division, which includes its memory chip business, will be in the red in 2023 with a loss of 14.9 trillion won (approximately $11.2 billion), compared to a surplus of 23.8 trillion won (approximately $17.8 billion) in the previous year. It was announced that.
But this year, the market is expected to recover gradually “despite various potential obstacles including interest rate policy and geopolitical issues,” Samsung said in a statement on Wednesday.
It added that the company managed to increase prices for memory chips in the fourth quarter compared to the previous quarter, showing some “improved performance.”
But Samsung warned it would continue to face challenges. “With continued macroeconomic uncertainty expected to weigh on the business environment in the near term, the company expects earnings to show modest improvement in the first half of 2024, with more significant improvement in the second half. “We expect it to be 2020,” he said.
Samsung stock fell 1.6% Wednesday in Seoul.
