Friday, June 14, 2024
Tech News

Samsung profit surges on back of chip recovery

Samsung is expected to record its highest earnings in over a year in its latest quarter on the back of recovering demand for chips.

The South Korean tech giant said on Friday in its preliminary earnings guidance for the first quarter of 2024 that it expected 71 trillion won in revenue and 6.6 trillion won in operating profit, an increase of 11% and 931%, respectively, from a year earlier.

It marks a return to form for Samsung, which saw its operating profit nosedive to 640 billion won in the first quarter of last year as the downcycle of the semiconductor market began in earnest.

Samsung’s quarterly revenue figure for its latest quarter was also the highest in five quarters, indicating that it is seeing sales increase across all its products from consumer electronics to chips.

Samsung’s 2023 performance was its worst in over a decade, caused mainly by the downcycle of the chip market as well as lower demand for smartphones and TVs due to the global economic slowdown. The company responded by lowering its production output of chips and focusing on premium products when it came to electronics.

However, the company recorded profits from DRAM for the first time in a year in the fourth quarter, signaling the start of a recovery.

South Korean analysts expect Samsung’s chip division to have returned to profitability in the first quarter and DRAM and NAND prices to continue to climb up this year. Kyung Kye-hyun, CEO of Samsung’s chip division, said last month that the company expects its earnings this year to be level to those in 2022. The launch of the Galaxy S24 series during the first quarter is also expected to have contributed heavily to the profit jump.

Samsung will announce its full earnings report for the quarter near the end of the month.

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