Samsung Electronics revealed the smallest profit drop in six quarters. Analysts’ estimates point to a 14% decline in the fourth-quarter profit, reaching 3.7 trillion won. This figure reflects a year-on-year drop compared to the previous year’s Q4 profit of 4.31 trillion won, signaling a challenging period for the tech giant.

The chip division, a critical segment for Samsung, is expected to show signs of recovery, with a projected reduction in the quarterly loss to around 1.2 trillion won. The DRAM chips business, after consecutive quarterly losses in Q2 and Q3, returned to profitability. This positive shift is buoyed by indications of an industry-wide recovery, as DRAM and NAND flash chip prices experienced a rebound in Q4.

The encouraging trends in DRAM and NAND prices reveal a promising outlook for the semiconductor industry in 2024. Mobile DRAM chip prices witnessed an 18 to 23% increase, while mobile NAND flash chip prices rose by 10 to 15% in the last quarter. These price hikes underscore a positive trajectory for the sector, fueling optimism for a broader recovery in the upcoming year.

Samsung’s production strategy, characterized by a cut in production since H1 2023, seems to be adapting to the changing market dynamics. In Q4, there are indications of gearing up for increased DRAM chip production, including an uptake in silicon wafers. The company’s aggressive stance in selling memory chips in Q4, especially in comparison to competitors like SK Hynix, signals an effort to lower inventory levels and align with market demands.

Despite challenges in the mobile business, Samsung is expected to show an operating profit of around 2.5 trillion won. However, shipments of flagship foldable models are estimated to have fallen by about 1 million units each compared to Q3. The mobile segment’s performance, affected by declining sales volumes of flagship smartphones with flexible displays, underscores the challenges faced by Samsung in this competitive market.

Investors keenly await the preliminary results set to be announced this week, as Samsung’s profit decline is considered a significant indicator for the entire semiconductor market. Despite the negative dynamics, the slowdown in the profit decline is viewed as a positive signal for investors, offering a glimpse of potential stability in the semiconductor industry.

Analysts, however, remain cautious, predicting a 35% year-on-year decline in Samsung’s operating profit to $2.82 billion for the last quarter. The semiconductor business, a key revenue driver, is expected to limit its operating loss to about $912 million, a significant improvement compared to the higher losses in the second and third quarters of the previous year. The memory price trends and production strategies employed by Samsung in the last quarter reveal the efforts to balance market demands and profitability, underlining the intricate challenges faced by one of the industry giants.

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