Samsung’s flag waves at Samsung Electronics‘ workplace in Seocho District, Seoul, Friday, when the corporate introduced its working revenue for the fourth quarter of 2024 plunged 29.2 p.c from three months earlier. Newsis
Samsung Electronics ended up posting an working revenue of 6.5 trillion received ($4.48 billion) for the fourth quarter of 2024, as the corporate suffered a essential slowdown throughout its foremost companies of chips and home equipment.
Particularly, the chip enterprise logged a disappointing 2.9 trillion received in working revenue because of the firm’s gradual transition to high-bandwidth reminiscence (HBM) chips specialised for synthetic intelligence (AI) processors. The tech big acknowledged that it’s dealing with challenges however added that it expects to attain a restoration “inside a brief interval.”
Samsung introduced the 6.5 trillion received working revenue in an earnings name on Friday, together with gross sales of 75.8 trillion received for a similar interval. The numbers signify 129.9 p.c and 11.8 p.c will increase year-on-year, respectively, however fell in need of brokerages’ expectations that the working revenue would attain 7 trillion received.
On a consolidated yearly foundation, the corporate’s 2024 gross sales stood at 300.9 trillion received, and its working revenue reached 32.7 trillion received, representing 16.2 p.c and 398.3 p.c year-on-year will increase.
The numbers improved from a yr earlier, when the worldwide chip business was in a downcycle however backpedaled in comparison with the earlier quarter, with the fourth-quarter gross sales and working revenue declining 4.17 p.c and 29.2 p.c, respectively.
For the fourth quarter, the corporate’s chip-making Gadget Options division posted 30.1 trillion received in gross sales and a couple of.9 trillion received in working revenue. Gross sales improved from three months earlier, however the working revenue slowed 24.9 p.c from 3.86 trillion received throughout the identical interval.
The numbers are disappointing when in comparison with these of Samsung’s chip rival SK hynix. Earlier this month, SK hynix posted a slew of report highs in its fourth-quarter earnings, together with an working revenue of 8.08 trillion received, buoyed by its strong presence within the world HBM market.
Which means that SK hynix, which makes solely reminiscence chips, was extra worthwhile than all Samsung Electronics’ companies mixed, and Korea’s largest firm is now trailing behind SK hynix as a consequence of setbacks in supplying HBM chips for main shoppers, specifically Nvidia.
Samsung stated in an announcement that its income from reminiscence chips was at a brand new fourth-quarter excessive as a consequence of elevated gross sales of HBM and high-capacity DDR5, however the working revenue declined because of the elevated R&D bills and preliminary ramp-up prices for increasing superior manufacturing capability.
In the course of the earnings name, Samsung stated its HBM income for the fourth quarter grew 1.9 occasions in comparison with the earlier quarter, however it’s “barely decrease” than its preliminary expectations due to geopolitical points and “adjustments in demand stemming from improved HBM3e merchandise which might be deliberate (for transport) within the first quarter of this yr.”
Samsung Electronics‘ 12-layer high-bandwidth reminiscence (HBM) 3e / Courtesy of Samsung Electronics
Hours earlier than the earnings name, Bloomberg reported that Samsung handed Nvidia’s qualification check for less-advanced eight-layer HBM3e chips in December. Samsung didn’t point out Nvidia relating to the eight-layer chip however famous that it is going to be in a position to provide improved eight-layer HBM3e chips within the first quarter of this yr.
The corporate stated, nonetheless, that it expects a slowdown for the reminiscence enterprise within the first quarter because of the U.S. authorities’s just lately introduced export controls on superior semiconductors and main clients shifting their orders to the improved HBM merchandise.
“The demand for cellular and PC reminiscence stays weak, whereas uncertainty in HBM demand is rising as a consequence of (U.S.) export controls on AI chips,” the corporate stated. “Moreover, demand is deferring on HBM, resulting in an anticipated decline in gross sales quantity. Consequently, the primary quarter is more likely to see each sluggish demand for common DRAM and weaker-than-expected HBM gross sales.”
Nonmemory companies, specifically chip design and foundry, each noticed their profitability decline as a consequence of elevated R&D prices and weakening demand for cellular chips. Samsung didn’t break down its nonmemory earnings, however analysts assume losses exceeded 2 trillion received within the nonmemory sector.
The slowdown in its foundry enterprise is anticipated to lengthen, as Samsung dropped hints at outsourcing base die for its next-generation HBM4, as a substitute of utilizing its in-house foundry. The corporate additionally forged a dark outlook for the chip design phase, as its Exynos processors usually are not provided to the newest Galaxy S25 smartphone sequence.
“HBM4 is being developed as deliberate, with mass manufacturing deliberate for the second half of subsequent yr,” the corporate stated. “We’re getting ready for the commercialization of customized HBM with a number of shoppers… Since assembly buyer necessities is essential, we plan to pick out foundry companions for base die manufacturing flexibly based mostly on every consumer’s wants.”
Samsung Electronics workers enter the corporate’s workplace in Seocho District, Seoul, Friday, when the corporate introduced its fourth-quarter earnings. Newsis
The corporate’s equipment enterprise, together with smartphones, dwelling home equipment and others, posted 40.5 trillion received in gross sales and a couple of.3 trillion received in working revenue for the fourth quarter, each backpedaling from that of three months earlier.
The corporate noticed declines in each the gross sales and working revenue of its smartphones from the earlier quarter because the influence of the Galaxy S24 sequence waned, resulting in decrease telephone gross sales. Additionally, intensified competitors resulted in weaker profitability for its TVs and residential home equipment, the corporate defined.
“We’re properly conscious of headwinds that we face, and we’re doing our greatest to beat,” Samsung Electronics Chief Monetary Officer Park Quickly-chul stated. “We imagine that with our various enterprise portfolio and the competitiveness of our core companies, we are able to progressively recuperate from the present challenges… We see the present points as a possibility for a brand new leap ahead and are assured that we are able to resolve them inside a brief interval.“
