Samsung 2023 Profit Plunge: 85%, Semiconductor Loss 800B Yuan

In recent On January 31, Samsung Electronics officially disclosed its financial results for the fourth quarter of 2023 and the entire fiscal year. Despite a substantial 84.86% year-on-year decline in operating profit to 6.57 trillion Korean won (approximately 354.6 billion Chinese yuan) for 2023, the fourth-quarter performance demonstrated notable improvement, especially with net profit surpassing market expectations.

According to the financial reports, Samsung Electronics recorded fourth-quarter sales of 67.78 trillion Korean won (approximately 3,646.56 billion Chinese yuan), reflecting a 3.81% year-on-year decrease. Operating profit amounted to 2.82 trillion Korean won (approximately 151.72 billion Chinese yuan), indicating a 34.4% year-on-year decline, consistent with the performance guidance released earlier this month. However, net profit in the fourth quarter exceeded market expectations, reaching 6.02 trillion Korean won.

Analyzing the performance of different departments in the fourth quarter of 2023:

The Digital Solutions (DS) department, responsible for semiconductor business, reported sales of 21.69 trillion Korean won, narrowing the operating loss to 2.18 trillion Korean won (approximately 117 billion Chinese yuan). This represents a significant improvement compared to the operating losses in the first, second, and third quarters of the previous year.

Samsung Electronics' semiconductor business, influenced by the effects of reduced memory production and stabilized prices, saw a substantial reduction in losses. Dynamic Random Access Memory (DRAM) returned to profitability for the first time in four quarters. However, the annual loss for the entire semiconductor business remained high at 14.88 trillion Korean won (approximately 800.5 billion Chinese yuan).

Samsung mentioned that its storage chip business strengthened significantly as customers adjusted inventory levels. While demand for system semiconductors did not show improvement due to reduced demand for applications like smartphones, the company anticipates gradual recovery in the chip market with the expansion of artificial intelligence applications and increased demand for new servers.

Samsung stated, "Despite potential challenges such as monetary policy and geopolitical issues, we expect the memory business market to continue its recovery by 2024."

The Device Experience (DX) department reported sales of 39.55 trillion Korean won, with operating profit at 2.62 trillion Korean won. The Mobile Experience (MX) department, responsible for smartphones, experienced a decline in sales and operating profit due to reduced demand following the saturation of the market. Additionally, Samsung's TV and home appliance business struggled due to decreased demand and intensified competition. 

Market analysis from IDC indicated a shift in the global smartphone manufacturing landscape, with Samsung losing its position as the largest smartphone manufacturer to Apple, primarily attributed to a decline in Samsung's smartphone sales.

The financial report also highlighted that facility investments in the fourth quarter amounted to 16.4 trillion Korean won, with semiconductor investments at 14.9 trillion Korean won and display investments at 800 billion Korean won. Annual facility investments remained stable at 53.1 trillion Korean won, year-on-year.

Looking at the entire year of 2023, Samsung Electronics reported annual sales of 258.94 trillion Korean won, representing a 14.33% year-on-year decrease. Operating profit for the year was 6.567 trillion Korean won (approximately 354 billion Chinese yuan), an 84.86% year-on-year plunge, marking the lowest since the 2008 financial crisis.