Samsung Electronics: record losses and reduction in overall operating profit by 35%
Samsung Electronics faced setbacks in the last quarter of 2023. The company's total revenue was 67.78 trillion Korean won (approximately $51 billion), while analysts had expected revenue of 69.27 trillion Korean won. Revenue decreased 3.8% compared to the fourth quarter of 2022.
Bad quarter for Samsung Electronics
Declining operating profit
The company generated 2.82 trillion KRW in operating profit in the last quarter, down 34.57% from a year earlier in the same period. Operating profit was expected to reach 3.43 trillion Korean won.
Significant losses in the semiconductor business
For 2023, the semiconductor business of Samsung Electronics, which has long time was the financial engine of the company, suffered losses of 14.88 trillion Korean won. Compared to the previous year, this business generated a profit of KRW 23.82 trillion. Weak global demand for memory and other chips was the reason for these results.
Improved revenue and operating profit
However, Samsung says its revenue and operating profit in the fourth quarter improved from the third quarter due to recovery in memory chip prices and sales of premium displays. Due to the "fading effect" of demand for new models launched in the third quarter, the smartphone business' revenues and profits declined in the fourth quarter compared to the previous quarter.
The smartphone market is shifting towards premium
There is a shift in the smartphone market towards premium -class where companies like Apple do better.
"We will focus on increasing sales of high-value-added products to improve profitability," Samsung said.
The average selling price of Samsung smartphones increased by approximately $100 from 2020 to 2023.
In the first quarter, the company expects a decline in demand for smartphones due to seasonality, but predicts growth in the premium segment compared to the same period last year. Samsung expects a "moderate improvement" in its profits in the first half of 2024, while a "more significant improvement" can only be expected in the second half of the year.
Answers to questions
Samsung Electronics generated revenue of 67.78 trillion Korean won (about $51 billion) in the last quarter of 2023.
How did Samsung Electronics' operating profit change in the last quarter of 2023 compared to the previous year?
Samsung Electronics' operating profit in the last quarter of 2023 was KRW 2.82 trillion, down 34.57% year-on-year.
Samsung Electronics' semiconductor business suffered a record loss of 14.88 trillion Korean won in 2023 due to weak global demand for memory and other chips.
- Samsung Electronics is a company specializing in the production of electronics and technology solutions.