South Korean tech giant Samsung has reported its weakest annual earnings in over a decade, signaling challenges in the technology market.
The company's annual revenue for 2023 stands at KRW 258.94 trillion ($194 billion), reflecting a substantial drop compared to the previous fiscal year. Notably, operating profit plummeted to KRW 6.57 trillion ($4.9 billion), marking a 10-year low (via Engadget).
Samsung's annual earnings slump, facing chip and smartphone market challenges.
Samsung Reports Declining Profits
The decline in profits can be traced back to weak demand for Samsung's chips and smartphones. The operating profit for 2022 was already lower than the previous year, standing at KRW 43.38 trillion ($35 billion). According to the Wall Street Journal, this downturn represents Samsung's most challenging financial performance in over a decade.
Despite signs of recovery in its memory business, Samsung reported operating losses of KRW 2.18 trillion ($1.63 billion) for the fourth quarter of 2023. Notably, this marks the semiconductor division's first annual loss in 15 years, underlining the severity of the challenges faced by the company.
The visual display and digital appliances division also experienced setbacks, posting KRW 0.05 trillion ($37.5 million) in operating losses, even as TV sales performed well during the holiday season (via Nikkei).
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Lower Smartphone Sales
Samsung's mobile business also faced headwinds, with a decline in sales and profit quarter-on-quarter. This dip is attributed to lower smartphone sales and the diminishing impact of previous flagship models.
As the company navigates these challenges, it aims to boost profits in the first quarter of 2024 by focusing on high-value-added products, including components for generative AI products.
Meanwhile, Samsung's latest Galaxy S24 series has shattered pre-sale records in Korea, breaking not only the pre-sale record for Galaxy S phones, but also setting a new daily average pre-order sales record.
The highly anticipated Galaxy S24 series, which was unveiled earlier this month, includes cutting-edge features, with Galaxy AI emerging as a standout performer.
What's Next for Samsung
Looking ahead, Samsung anticipates stronger demand for its chips in the PC and mobile sectors in 2024. However, the company remains cautious, acknowledging that the recovery may take time as customers continue downsizing their inventories.
A key element of Samsung's strategy involves the recently launched Galaxy S24 series equipped with advanced AI capabilities. The company believes that the AI features of the new phones can drive double-digit growth in its mobile business throughout 2024.
The Galaxy S24 series has already hit the market, with prices ranging from $800 for the basic version to $1,300 for the S24 Ultra.
In a broader context, Samsung's struggles come as it faces intense competition in the smartphone market. Last year, Apple surpassed Samsung as the world's largest smartphone maker by volume, ending Samsung's decade-long reign.
The competition between these tech giants continues to evolve, with Apple set to report its first quarterly revenue increase in a year.
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