Samsung Electronics Expects 931% Increase in First Quarter Operating Profit amid Chip Price Rebound

According to a preliminary statement released on Friday, Samsung Electronics is anticipating a remarkable 931% boost in its first quarter operating profit. The projected figure for the January-March quarter stands at 6.6 trillion Korean won (approximately $4.89 billion), marking a substantial surge from the 0.64 trillion won recorded in the same period of 2023.

The profit guidance for the first quarter of 2024 has surpassed LSEG's estimate of 5.24 trillion won. Executive director and analyst at Daiwa Securities, SK Kim, expressed confidence in Samsung Electronics' performance, stating, "We forecast Samsung Electronics will post solid earnings for 1Q24 driven by memory price hikes and robust S24 sales, beating market estimates."

Daiwa Securities also maintained their "buy" rating on Samsung Electronics and raised the price target to 110,000 won.

Revenue Increase

First quarter revenue is anticipated to have risen by 11.4% from the previous year to reach 71 trillion won, as per the preliminary earnings statement. While this growth is significant, LSEG analysts had initially projected a slightly higher revenue of 71.8 trillion won.

As the world's largest producer of dynamic random-access memory chips, Samsung has been deeply impacted by the fluctuations in memory chip prices and demand. After facing challenges due to excess inventories post-Covid and weak demand for end products, the company is gradually recovering, with memory chip prices rebounding and demand showing signs of improvement.

The global foundry industry also saw a positive trend, with revenue rising about 10% sequentially in the fourth quarter. However, on a year-on-year basis, there was a 3.5% decline during the same period.

Analyst Insight and Future Prospects

Referring to the industry's turnaround, Counterpoint Research stated, "Despite lingering macroeconomic uncertainties, the industry started bottoming out in H2 2023, driven by supply chain inventory restocking demand in the smartphone and PC sectors." This assessment aligns with the positive outlook for Samsung Electronics, as they anticipate announcing detailed earnings later this month.