On Wednesday, Samsung reported its fourth consecutive quarter of declining profits, marking the end of a challenging year that also saw it relinquish its title as the world’s leading smartphone manufacturer.
Despite losing sales leadership to Apple, Samsung remains optimistic about AI-driven smartphones.
The South Korean technology behemoth experienced a 35% decrease in profit, highlighting the persisting sluggishness in demand for consumer devices and semiconductor chips.
For the December quarter, the company disclosed that its operating profits dwindled to 2.8 trillion won (nearly $2.1 billion), compared to 4.3 trillion won ($3.5 billion) in the previous year, aligning closely with its earlier earnings projection.
Samsung remains hopeful about a resurgence in mobile device demand this year. The company informed investors of its expectation for a rebound in the smartphone market in 2024, especially with the introduction of new products like AI-powered smartphones, which are anticipated to stimulate demand.
Despite traditionally being the world’s top smartphone seller, Samsung was surpassed by Apple (AAPL) in the fourth quarter, typically a peak period due to the year-end holiday shopping season.
According to IDC, a market research firm, Apple held 20.1% of the global market share in 2023, slightly edging out Samsung’s 19.4%.
Although the South Korean company acknowledged lower smartphone sales in the fourth quarter, it observed an increase in demand for high-end smartphones compared to the previous three months. Tablet sales also experienced growth, attributed to customer interest in new product launches.
Samsung is facing challenges on multiple fronts. Following a significant supply shortage during the Covid pandemic, demand for semiconductors has decreased over the past year due to weak consumer demand for electronics amidst global economic uncertainty. Consequently, Samsung, the world’s largest memory chip maker, has incurred substantial losses.
On Wednesday, Samsung’s device solutions unit, encompassing its memory chip business, recorded a loss of 14.9 trillion won (approximately $11.2 billion) for 2023, contrasting with a profit of 23.8 trillion won ($17.8 billion) the preceding year.
Despite potential hurdles such as interest rate policies and geopolitical concerns, Samsung expressed optimism about a gradual market recovery this year, as outlined in a statement on Wednesday. The company noted a slight improvement in performance in the fourth quarter, attributed to higher memory chip prices compared to the previous quarter.
However, Samsung cautioned that challenges persist. It anticipates moderate improvement in earnings for the first half of 2024, with more significant gains expected in the latter half of the year, as ongoing macroeconomic uncertainties continue to impact the business environment.
Samsung’s shares experienced a 1.6% decline in Seoul on Wednesday.
Read More: Samsung introduces the Galaxy S24 smartphones featuring integrated AI functionalities.
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