SHANGHAI, CHINA – MARCH 14, 2024 – Visitors view Galaxy S24 phones at SAMSUNG booth at AWE2024 in Shanghai, China, March 14, 2024.
CFOTO | Future publications | Getty Images
Samsung Electronics said Friday it expects a 931% increase in first-quarter operating profit as chip prices rebound.
Operating profit for the January-March quarter likely reached 6.6 trillion Korean won ($4.89 billion), up 931 percent from a year ago, according to a preliminary statement. Profit in the first quarter of 2023 was 0.64 trillion won.
The profit forecast for the first quarter of 2024 exceeds LSEG’s estimate by 5.24 trillion won.
“We expect Samsung Electronics to post strong earnings in 1Q24 driven by rising memory prices and robust S24 sales, beating market estimates,” said SK Kim, executive director and analyst at Daiwa Securities in a report from March 27.
“We expect the strong AI-driven memory recovery cycle to generate profits in 2024-25E,” Kim said. Daiwa maintained its buy rating on Samsung Electronics and raised its price target to 110,000 won.
First-quarter revenue likely rose 11.4 percent from the same period last year to 71 trillion won, the company said in a preliminary earnings statement. LSEG analysts expect revenue of 71.8 trillion won.
Samsung is the world’s largest maker of dynamic random access memory chips, found in consumer devices such as smartphones and computers.
Memory chip prices fell drastically last year, due to post-Covid excess inventory and weak demand for finished products like smartphones and laptops.
In third-quarter earnings calls, Samsung and the world’s second-largest DRAM chipmaker SK Hynix reported that weak demand for memory chips had finally bottomed out following production cuts.
Revenues in the global foundry industry grew about 10% sequentially in the fourth quarter, according to Counterpoint Research’s Foundry Services. However, on an annual basis, revenue fell 3.5% over the three-month period.
“Despite continued macroeconomic uncertainties, the sector has started to bottom out in the second half of 2023, driven by demand for supply chain inventory replenishment in the smartphone and PC sectors,” Counterpoint Research said April 2nd.
Samsung Electronics is expected to announce detailed results later this month.
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