Samsung Electronics announced on Friday that they are expecting a staggering 931% increase in their first-quarter operating profit. This increase is primarily attributed to the rebound in chip prices. The January-March quarter saw the operating profit rise to 6.6 trillion Korean won ($4.89 billion), a significant leap from the previous year’s 0.64 trillion won. This profit estimate for the first quarter of 2024 exceeds previous estimates by LSEG, indicating a strong financial performance by Samsung Electronics.
Analysts are predicting that the solid earnings for 1Q24 will be driven by memory price increases and the robust sales of the S24 model. This positive forecast has led executives, such as SK Kim from Daiwa Securities, to raise their price target for Samsung Electronics and maintain a “buy” rating. The expectation is that a strong AI-driven memory upturn cycle will continue to boost earnings for 2024-25E.
In addition to the significant increase in operating profit, Samsung Electronics also expects a revenue growth of 11.4% in the first quarter of 2024, amounting to 71 trillion won. With Samsung being renowned as the world’s largest manufacturer of dynamic random-access memory chips, the company is well-positioned to capitalize on the current market demand.
The memory chip industry faced challenges last year, with prices plummeting due to excess inventories and weak demand for smartphones and laptops post-Covid. However, recent reports suggest that the demand weakness has bottomed out, following production cuts by major players like Samsung and SK Hynix. The global foundry industry saw a sequential revenue increase of about 10%, indicating a gradual recovery in the market.
Despite lingering macroeconomic uncertainties, experts believe that the industry is on a path of recovery, driven by inventory restocking demand in the smartphone and PC sectors. Samsung Electronics is expected to release detailed earnings later this month, providing further insights into their financial performance and market positioning. Overall, the company’s positive outlook for the first quarter of 2024 signals a potential resurgence in the memory chip industry and solidifies Samsung’s position as a key player in the market.
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