Daisy Watts 
Jan 09, 2024
Samsung on Tuesday said it is expecting a 35% drop in its fourth-quarter operating profit.
The world’s largest manufacturer of chips, smartphones and TVs has estimated the operating profit of the fourth quarter to be 2.8 trillion won ($2.13 billion), sliding from 4.31 trillion won last year during the same period.
The nosedive is worse than estimated by industry analysts given the rebound it observed in the demand of its various businesses during the fourth quarter of 2023 despite the price hikes in its products.
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Analysts claim that the Korean tech giant might have miscalculated the profit from its chip contract manufacturing, mobile processors, television and home appliance businesses.
"The only thing that has improved is memory chips, and that's because Chinese PC and mobile makers began restocking memory chips in the fourth quarter after using up their stocks for so long," said Lee Min-hee, analyst at BNK Investment & Securities.
"Consumer demand is still not great, and unless interest rates are lowered and the economy stimulated, it may not improve much," the analyst added.
Similarly, Samsung’s archrival LG Electronics on Monday anticipated its fourth-quarter operating profit to be 313 billion won, indicating a steeper drop which is likely driven by the increasing expenditures on advertising campaigns in the domain of TVs and home appliances to push consumer demand.
This is the lowest Samsung's profit drop among the last five quarters as Samsung in the third quarter of 2022 suffered a 31% drop in profit, because of less demand for gadgets.
Samsung's mobile division probably experienced a decrease of approximately 1 million units in shipments for both of its top-tier foldable models compared to the previous quarter. This decline is believed to have contributed to a slight decrease in earningsm, analysts noted.
