Samsung reports sharp drop in profit amid chip slowdown

Samsung Electronics posted an operating profit of 6.5 trillion won (USD 4.48 billion) for the fourth quarter of 2024, as it faced headwinds across its main chips and appliances businesses.

The South Korean company’s chip business showed an underwhelming 2.9 trillion won operating profit due to its slow transition to HBM chips specialized for AI processors.  

Though Samsung’s operating profit dropped sharply from the previous three months, it posted better-than-expected fourth-quarter revenue. 

“[O]perating profit decreased slightly compared to the previous quarter as a result of increased R&D expenses to secure future technology leadership, as well as the initial ramp-up costs to secure production capacity for cutting-edge nodes,” Samsung said. 

The profit was down 29% from the previous quarter but in line with the preliminary fourth-quarter figure it reported earlier.

“In the first quarter of 2025, our memory business will shift its business portfolio to more high-value-added products by accelerating the migration to cutting-edge nodes in response to demand for high-performance and high-density products,” Samsung said.

For DRAM, the tech giant said it would increase the share of DDR5 and LPDDR5X shipments by accelerating the transition to the 1b nanometer process. When it comes to NAND, the company is in the middle of a tech transition from V6 to V8.  

The company expects the memory market demand to recover in the second quarter.

In the first quarter of this year, Samsung’s contract chipmaking business is likely to post weak earnings linked to lukewarm mobile demand and lower factory utilization rates.

The South Korean company spent 10.3 trillion won on R&D in the fourth quarter and 35 trillion won on R&D projects throughout 2024.

“For 2025 as a whole, the Company plans to enhance technological and product advantages in AI, continue to meet future demand for high-value-added products and drive sales growth in premium segments,” it added.