Samsung Electronics reported a significant slowdown in its chip business, leading to a drop in its operating profit for the fourth quarter. The South Korean tech giant posted revenue of 75.8 trillion Korean won ($52.2 billion), which exceeded expectations but marked a nearly 30% decline in operating profit compared to the previous quarter. Despite the drop in operating profit, the company’s annual revenue reached its second-highest figure on record, only surpassed by 2022, and saw a 12% increase from the previous year.

However, the company faced challenges as its operating profit fell short of expectations, with a quarter-on-quarter revenue decline of over 4% amid weak market conditions and rising expenditures. Samsung had previously forecast revenue of around 75 trillion Korean won, and while its operating profit matched forecasts, the overall performance highlighted ongoing difficulties in the semiconductor sector. For the full year, Samsung reported KRW 300.9 trillion in revenue and KRW 32.7 trillion in operating profit, a sharp contrast to the previous year’s figures of KRW 258.94 trillion in revenue and KRW 6.57 trillion in profit.

Samsung’s semiconductor business, a major revenue contributor, saw a significant dip in operating profit, down by over 25% from the previous quarter, despite achieving a record-high revenue of 30.1 trillion Korean won in the memory sector. The decline was attributed to increased research and development expenses as Samsung works to secure future technology leadership and ramp up production for cutting-edge memory products. Samsung’s failure to capitalize on the high-bandwidth memory (HBM) market, where competitors like SK Hynix and Micron have outpaced them, also contributed to the downturn. The company acknowledged that its focus on legacy products has hindered its ability to capture the growing demand for HBM, used in high-performance computing and AI applications.

In its mobile business, Samsung saw a decline in sales and profit, particularly after the launch of new flagship devices, including the Galaxy S24 series. However, the company remained optimistic, noting strong full-year growth driven by flagship sales and increased shipments of tablets and wearables. Looking ahead, Samsung plans to focus on premium devices and AI-driven smartphones, aiming to strengthen its market share, especially in the premium segment where competition with Apple is intensifying.

For the current quarter, Samsung warned that earnings might remain weak due to the semiconductor market’s ongoing challenges but expressed confidence in its plans for growth through AI innovations and premium product lines.

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