April 19, 2024
  • Samsung reported better-than-expected working revenue within the third quarter, though it fell 77.6% from a yr in the past.
  • Though there was a year-over-year decline, working revenue this quarter elevated 262.6% in comparison with the second quarter, suggesting that the oversupply of reminiscence chips could have bottomed out.
  • Samsung is the world’s largest maker of dynamic random entry reminiscence chips, that are utilized in shopper gadgets corresponding to smartphones and computer systems.

Normal view of holiday makers at Samsung sales space throughout chinajoy 2023 at Shanghai New Expo Heart in Shanghai, China, July 28, 2023 (Photograph by Ying Tang/NurPhoto through Getty Photos)

Photograph solely | Photograph solely | Getty Photos

South Korea’s Samsung Electronics reported better-than-expected quarterly working revenue on Tuesday, regardless of a 77.6% year-on-year decline.

Whereas there was a year-over-year decline, working revenue elevated 262.6% within the third quarter in comparison with the second quarter, suggesting that the reminiscence chip glut could have bottomed out. First quarter working revenue fell 85.15% in comparison with the fourth quarter of 2022, whereas second quarter working revenue solely improved 4.68% in comparison with the primary quarter.

Listed below are Samsung’s third-quarter outcomes in comparison with estimates:

  • Income: 67.4 trillion Korean received (about $50 billion) versus 67.8 trillion Korean received anticipated by LSEG analysts.
  • Working consequence: 2.43 trillion Korean received vs. LSEG analysts count on 2.3 trillion Korean received.

Samsung’s income fell 12.2% year-on-year within the quarter ended September, whereas working revenue fell 77.6% in the identical interval.

Earlier this month, Samsung estimated third-quarter income at 67 trillion Korean received and working revenue at 2.4 trillion received.

The South Korean chip big is the world’s largest producer of dynamic random entry reminiscence chips. Its reminiscence chips are present in shopper gadgets corresponding to smartphones and computer systems.

“Within the fourth quarter, uncertainties stay relating to the market restoration attributable to wars and geopolitical dangers, a gradual restoration in demand and ongoing changes in buyer inventories,” Samsung stated throughout its earnings name on Tuesday.

“Nonetheless, we’re seeing early indicators of demand step by step stabilizing and bettering, supported by a restoration in shopper sentiment, easing inflation and new product launches by main prospects, significantly within the PC and cell segments,” Samsung stated.

On the outlook for reminiscence demand, Samsung stated demand will decide up within the fourth quarter attributable to year-end promotions, new product launches by its main prospects, in addition to robust demand for generative AI.

Giant language fashions like ChatGPT require many highly effective reminiscence chips that enable such generative AI fashions to recollect particulars from previous conversations and person preferences to generate human-like responses.

In a press launch forward of its earnings name, Samsung stated the corporate had obtained “quite a few shopping for inquiries as consciousness grew that the {industry} had hit all-time low following industry-wide manufacturing cuts.” It added that it’s persevering with to develop gross sales of superior node merchandise.

These superior node merchandise embrace DDR5 – double knowledge charge 5 synchronous dynamic random entry reminiscence, and UFS4.0 – flash storage for the 5G period.

“Our view of a significant earnings restoration for the following few quarters, led by reminiscence, stays intact, with the bigger industry-wide manufacturing cuts, gradual enchancment in demand tendencies, in addition to combine enchancment in the direction of excessive common promoting worth merchandise corresponding to DDR5,” Goldman Sachs stated in a report dated twelfth of October.

The funding agency maintained its “purchase” ranking with an unchanged worth goal of 93,000 received. Samsung shares had been down 0.30% at 67,100 received on Tuesday morning.

In response to Counterpoint Analysis, world smartphone gross sales volumes fell 8% year-on-year within the third quarter of 2023, the ninth consecutive quarter of decline. This was largely because of the slower than anticipated restoration in shopper demand.

Smartphone and PC makers have been battling extra stock of reminiscence chips after stocking as much as meet elevated demand for shopper gadgets in the course of the pandemic. Inflation has brought on shoppers to chop again on spending and restrict purchases of shopper gadgets, resulting in a decline in demand and costs for reminiscence chips.

However the market grew 2% quarter-on-quarter, supported by a constructive improvement in September, suggesting an impending market restoration.

“We count on earnings to get better from This autumn 2023 because the product combine continues to enhance attributable to growing gross sales of high-bandwidth reminiscence 3 and a rise in reminiscence costs,” stated SK Kim, analyst at Daiwa Capital Markets , in an announcement dated Oct. 3.

“For storage, we count on a big discount in losses attributable to additional enchancment within the product combine and the reversal of stock write-offs because of the restoration in storage costs. For Show, we count on additional earnings enchancment by way of the growth of the vary of OLED panels for iPhone 15 fashions,” stated Kim.

Samsung stated it’s going to develop its gross sales of superior node merchandise to satisfy demand for high-performance chips for generative AI.

“We are going to actively tackle the demand for generative AI by growing our HBM3 and HBM3E gross sales share because of the largest manufacturing capability within the {industry},” Samsung stated on Tuesday, referring to its next-generation storage processors with high-bandwidth reminiscence.

Native media reported that Samsung is anticipated to provide high-performance DRAM chips and HBM3 to US chip designer Nvidia. Nvidia shares are up 187.54% year-to-date due to booming demand for its AI chips.

Daiwa Capital’s Kim stated she expects “rising alternatives associated to AI demand” for Samsung in 2024.

“Along with supplying HBM3 to Nvidia beginning in This autumn 2023 and increasing the providing in 2024, we count on Samsung Electronics to ship HBM3P concentrating on next-generation AI GPUs beginning in mid-2024,” Kim stated in an announcement dated Oct. 3.