Samsung Electronics Operating Profit Falls 1 Trillion Below Expectations... Eyes on Jensen Huang

Samsung Electronics Announces Preliminary Q4 Results
Operating Profit Around 6.5 Trillion KRW...Significantly Below Market Expectations
Weak IT Demand Leads to Declining Memory Profitability
Mobile and Home Appliances Also See Earnings Drop Amid Intensified Competition

Jensen Huang Mentions Samsung HBM Test at CES 2025
"Undoubtedly Will Succeed"

Samsung Electronics posted an operating profit in the 6 trillion won range in the fourth quarter of last year. Despite writing a letter of reflection in October last year and renewing its determination, the result was more than 1 trillion won below the market expectation, which had already dropped to the 7 trillion won range. The decline in profitability of its main product, general-purpose memory, and delays in the mass production schedule of high-bandwidth memory (HBM) are believed to have had the greatest impact on the poor performance. However, since Jensen Huang, CEO of NVIDIA, hinted at the possibility of Samsung Electronics supplying HBM, there is growing weight to the possibility of a rebound in this year's performance.

Samsung Electronics announced on the 8th that its consolidated sales for the fourth quarter of last year were tentatively estimated at 75 trillion won, with an operating profit of 6.5 trillion won. Compared to the same period last year, sales increased by 10.65% and operating profit by 130.5%, but both decreased by 5.18% and 29.19%, respectively, compared to the previous quarter, showing negative growth.

Both sales and operating profit fell short of market expectations. The securities industry had forecast sales of 77.4035 trillion won and operating profit of 7.9705 trillion won. Initially, the securities industry had even suggested an operating profit forecast around 10 trillion won. Afterward, the estimates were repeatedly revised downward, but the actual results were even lower.

The semiconductor sector, Samsung's core business, appeared to be notably sluggish. Although Samsung Electronics did not disclose segment-specific results on the day, the securities industry estimated that the Device Solutions (DS) division, which handles the semiconductor business, posted an operating profit of around 3 trillion won.

In an explanatory document, Samsung Electronics stated, "Due to the deterioration of the market centered on IT products, sales and operating profit decreased. The memory business achieved the highest-ever memory sales in the fourth quarter by expanding sales of high-capacity products amid weak demand for general-purpose products mainly for PCs and mobiles. However, performance declined due to increased research and development (R&D) costs to secure future technology leadership and increased initial ramp-up costs for expanding advanced process production capacity." It also explained that the non-memory business's performance declined due to decreased demand in major applications such as mobile, lower utilization rates, and increased R&D costs.

Jensen Huang, CEO of NVIDIA, is speaking at a global press conference held at the Fontainebleau Hotel in Las Vegas, USA, on the 7th (local time). Photo by Yonhap News

The decline in performance of the Mobile Experience (MX) division, caused by reduced effects of new mobile product launches and intensified competition among companies, was also reflected. The securities industry estimates that the MX and Network divisions posted operating profits of around 2 trillion won, the Display division around 1 trillion won, and the TV and home appliances division around 300 billion won.

Samsung Electronics recorded annual sales of 300 trillion won and an operating profit of 32.73 trillion won last year. These figures represent increases of 15.9% and 398.2%, respectively, compared to the previous year. However, the annual operating profit also fell short of the securities industry's consensus forecast of 34.2607 trillion won.

However, there is a forecast that Samsung Electronics may realize HBM supply to NVIDIA next year. SK Hynix currently supplies NVIDIA, but Samsung Electronics is conducting tests for supply. On the 7th (local time), Jensen Huang, CEO of NVIDIA, attending CES 2025, the world's largest electronics and IT exhibition held in Las Vegas, USA, said, "We are testing Samsung's HBM," and added, "There is no doubt that we will succeed with HBM."