South Korean technology giant Samsung Electronics Co. Ltd. delivered better-than-expected fourth-quarter revenue today, though it reported a sharp fall in operating profit as a result of higher research and development costs in its chip business.
The company also warned investors that it’s likely to see only limited earnings growth in the first quarter, as a result of weakness in the key memory chip market, which it dominates. However, it reassured analysts that it’s making progress in its efforts to meet Nvidia Corp.’s requirements for higher-end memory chips, which should help boost its fortunes in that market.
The chipmaker reported revenue of 75.8 trillion won ($52.2 billion) in the quarter, up 12% from a year earlier and edging past the analyst consensus estimate of 75.4 trillion won. Operating profit for the quarter rose 130% to 6.5 trillion won, but fell short of the 6.8 trillion won analyst estimate.
Samsung has long been the world’s leading supplier of memory chips, which are used in everything from laptops to servers and smartphones, and is also the world’s second-largest smartphone manufacturer.
For the full year fiscal 2024, the company delivered 300.9 trillion won in revenue, with operating profit coming to 32.7 trillion won, up from 258.94 trillion won and 6.57 trillion won respectively in fiscal 2023.
Looking to the current quarter, officials said earnings growth will likely be curtailed by weakness in the semiconductor markets, though it believes it can deliver overall revenue growth from its new generation of artificial intelligence-powered smartphones such as the Galaxy S25 smartphone series.
During the quarter just gone, Samsung’s chip business delivered an operating profit of 2.9 trillion won, down 25% on a sequential basis. For the first time, its chip revenue was surpassed by that of its main rival, SK Hynix Inc., which posted its fourth-quarter results earlier this month. That happened despite the chip business posting record-high fourth quarter revenue of 30.1 trillion won.
Both Samsung and SK Hynix manufacture dynamic random-access memory chips, which provide servers and PCs with the memory required for data processing tasks. However, SK Hynix has surpassed Samsung in the area of “high bandwidth memory,” which is a new kind of DRAM where the chips are stacked vertically to save space and reduce power consumption.
At present, SK Hynix supplies the bulk of the HBM chips used in Nvidia’s graphics processing units, which explains why it has been able to surpass Samsung in terms of revenue. Samsung has struggled to catch up with its rival, although it has finally gotten approval to supply its new eight-layer HBM3E memory chips to that company.
Samsung’s stock fell just over 2% in early trading Friday in South Korea.
