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(Bloomberg) — Samsung Electronics Co. posted its sixth straight quarter of declining working revenue, reflecting weak shopper demand and stoking uncertainty over the timing of a broader tech restoration.
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Korea’s largest firm reported a 35% fall in working revenue to 2.8 trillion gained ($2.1 billion), about 24% shy of estimates. Income slid greater than anticipated to 67 trillion gained. For all of 2023, Samsung reported its slimmest working revenue in 15 years.
The outcomes underscore how demand for smartphones and the reminiscence chips that energy fashionable electronics stays sluggish given financial uncertainty. It additionally muddies the outlook for a market restoration that many traders had hoped would emerge in 2024. In December, rival Micron Know-how Inc. delivered a better-than-projected income forecast that urged datacenter building might make up for lukewarm computing and cell machine markets.
“This exhibits that the rebound is slower than all of us thought,” mentioned Tom Kang, analysis director at Counterpoint Know-how Market Analysis. “Costs should not rising that quick and the demand from sure sectors shouldn’t be that robust.”
Samsung in October predicted the long-depressed $160 billion reminiscence market will bounce again steadily in 2024, pushed by a increase in AI improvement. Costs ought to begin climbing out of troughs across the latter a part of 2023, executives mentioned on the time.
The corporate’s shares fell 2.4% in Seoul on Tuesday. Its disappointing outcomes stem partly from a low utilization charge in its foundry chipmaking enterprise, mentioned Sanjeev Rana, an analyst at CLSA Securities Korea Ltd.
Learn extra on monetary analysts’ reactions to Samsung’s preliminary outcomes.
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The patron electronics unit additionally took a success from fierce competitors and better advertising and marketing prices, whereas revenue from its smartphone enterprise probably got here in towards the decrease finish of analysts’ estimates, he mentioned.
However there are indicators of restoration. South Korea’s semiconductor business in November recorded the most important positive aspects in years in each manufacturing and shipments. Given rising reminiscence costs and bettering demand, “it’s probably that Samsung’s chip enterprise will return to profitability inside the first half of 2024,” Rana added.
Buyers will need to hear about Samsung’s longer-term funding plans, significantly within the subject of AI, when executives preside over the discharge of its full outcomes on Jan. 31.
The corporate now goals to meet up with rival SK Hynix Inc. within the burgeoning subject of high-density reminiscence chips, the place it plans to extend capability by 2.5 instances in 2024. HBM, a sophisticated chip that handles knowledge extra shortly, works with {hardware} resembling Nvidia Corp.’s accelerators to hurry up knowledge processing for intensive duties like coaching AI fashions. Hynix Chief Govt Officer Kwak Noh-Jung advised reporters he anticipated AI demand to assist double the Korean agency’s market worth over three years.
“Samsung might have to realize market share in AI chips to realize strong revenue development in 2024,” Bloomberg Intelligence analysts Masahiro Wakasugi and Phu Pham wrote in a word after outcomes.
Samsung can be relying on a brand new lineup of units and foldables to drive development in 2024. The Korean firm is making ready to unveil its newest devices within the US later this month, at a time traders fear Apple Inc.’s iPhone 15 could also be working out of steam mere months after launch.
–With help from Haidi Lun, Annabelle Droulers, Youkyung Lee and Mayumi Negishi.
(Updates with inventory buying and selling within the fifth paragraph)
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