Although it has grown on an annual basis, the profit for the fourth quarter of last year of Samsung Electronics, the world’s largest manufacturer of memory TVs and smartphones, may fall short of even the disgracefully successful third quarter. If that wasn’t enough, in the company’s profit warning published on Wednesday, it reported an expected operating profit significantly below the preliminary analyst consensus.
In numbers, this is about 6.5 trillion South Korean won (converted to about $4.5 billion) for the three-month period that ended in late December, which is 1.2 trillion won less than the preliminary analyst consensus. Although the growth exceeds 130 percent on an annual basis, it is at the same time 29% lower compared to the third quarter result, with which the company already caused serious disappointment to investors.
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According to Samsung, the background of the weak performance is the ordeal related to the production of the new generation data center memories, the so-called HBM chips, which on the one hand took significant development costs in the last quarter, but on the other hand provided an opportunity for the competition, so primarily SK Hynix, also from South Korea, to , to fill the void left by Samsung as one of Nvidia’s top partners for AI data center supercomputers.
The slowdown also reflects the performance of the smartphone and TV market and the growing competition in this field as well. In relation to the former, it is a serious problem that Samsung has not presented a new model in the high-end segment for quite some time (this may change within weeks with the debut of the Galaxy S25 family), and where it presented new products (the 2024 Z Fold and Flip models with bendable displays), there the market reacted worse than expected.
Although the management apologized to him in an unusual way last year due to the poor results and the company also implemented a leadership change at higher levels, investors did not reward the company’s performance last year: Samsung’s share price fell by 32% last year due to the unfavorable effects, while the 2024- SK Hynix, facing a record profit, gained 23%.
The company will publish its final fourth-quarter business results on January 31.
Source: www.hwsw.hu
