common view of holiday makers are seen at Samsung sales space through the chinajoy 2023 at Shanghai new expo heart in Shanghai, China on July 28, 2023 (Picture by Ying Tang/NurPhoto through Getty Photos)
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South Korea’s Samsung Electronics reported Tuesday quarterly working revenue that was higher than anticipated regardless of dropping 77.6% from a 12 months in the past.
Whereas it was a decline year-on-year, third quarter working revenue jumped 262.6% from the second quarter, signaling {that a} reminiscence chip glut could also be bottoming out. First quarter working revenue plummeted 85.15% from the fourth quarter of 2022, whereas second-quarter working revenue noticed solely 4.68% enchancment from the primary quarter.
Listed below are Samsung’s third-quarter outcomes versus estimates:
- Income: 67.4 trillion Korean received (about $50 billion), vs. 67.8 trillion Korean received anticipated by analysts polled by LSEG.
- Working revenue: 2.43 trillion Korean received, vs. 2.3 trillion Korean received anticipated by LSEG analysts.
Samsung’s income for the quarter ending September fell 12.2% from a 12 months in the past, whereas working revenue dropped 77.6% in the identical interval.
Earlier this month, Samsung estimated third-quarter income can be 67 trillion Korean received and working revenue to be 2.4 trillion received.
The South Korean chip large is the biggest dynamic random-access reminiscence chip maker on the planet. Its reminiscence chips are present in shopper gadgets corresponding to smartphones and computer systems.
“Within the fourth quarter, uncertainties persist relating to the market’s restoration pushed by wars and geopolitical dangers, gradual demand rebound and ongoing buyer stock changes,” stated Samsung throughout its earnings name on Tuesday.
“However, we’re observing preliminary indications of demand, regularly stabilizing and enhancing, supported by recovering shopper sentiment, easing inflation and main prospects introducing new merchandise, significantly within the PC and cell segments,” Samsung stated.
On the outlook for reminiscence demand, Samsung stated it expects fourth quarter demand to select up with year-end promotions, new product launches by its main prospects in addition to robust demand for generative AI.
Massive language fashions corresponding to ChatGPT require quite a lot of high-performance reminiscence chips, which allow such generative AI fashions to recollect particulars from previous conversations and person preferences as a way to generate humanlike responses.
In a press launch forward of its earnings name, Samsung stated that it “acquired quite a few buy inquiries amid widening consciousness of the {industry} reaching a backside, following the industry-wide manufacturing cuts.” It added that it continued to broaden gross sales of advanced-node merchandise.
These advanced-node merchandise embody DDR5 — double information price 5 synchronous dynamic random-access reminiscence, and UFS4.0 — flash storage for the 5G period.
“Our view on a significant revenue restoration for the following a number of quarters led by reminiscence is undamaged, with the bigger industry-wide manufacturing cuts, regularly enhancing demand tendencies, in addition to combine enchancment in direction of high-average promoting worth merchandise corresponding to DDR5,” stated Goldman Sachs in an Oct. 12 report.
The funding agency maintained a “purchase” ranking with an unchanged goal worth of 93,000 received. Samsung shares have been down 0.30% at 67,100 received on Tuesday morning.
Indicators of restoration
International smartphone sell-through volumes fell 8% year-on-year within the third quarter of 2023, the ninth consecutive quarter to file a decline, in response to Counterpoint Analysis. This was largely due to the slower-than-expected restoration in shopper demand.
Smartphone and PC maker have been grappling with extra inventories of reminiscence chips after stockpiling to fulfill elevated demand for shopper gadgets through the pandemic. Inflation has induced customers to rein in spending and in the reduction of on purchases of shopper gadgets, driving down demand and costs for reminiscence chips.
However the market grew 2% quarter-over-quarter bolstered by a optimistic efficiency in September, signaling a market restoration forward.
“We count on earnings to rebound from 4Q23, given additional product combine enchancment on increasing gross sales of high-bandwidth reminiscence 3 and a reminiscence worth hike,” stated SK Kim, analyst at Daiwa Capital Markets, in an Oct. 3 be aware.
“For reminiscence, we assume a significant narrowing of losses attributable to an additional product combine enchancment and reversal of stock write-down from the reminiscence worth restoration. For show, we count on an additional earnings enchancment on increasing provide of OLED panels for iPhone 15 fashions,” stated Kim.
Continued 2024 momentum anticipated
Samsung stated that it will likely be increasing its gross sales of advanced-node merchandise to fulfill demand for prime efficiency chips in generative AI.
“We’ll actively tackle demand for generative AI by growing our HBM3 and HBM3E portion of gross sales on the again of the biggest manufacturing capability within the {industry},” Samsung stated Tuesday, referring to the following technology reminiscence processors with excessive bandwidth reminiscence.
Native media reported that Samsung is predicted to provide high-performance DRAM chips and HBM3 to U.S.-based chip designer Nvidia. Nvidia’s shares have surged 187.54% year-to-date because of booming demand for its AI chips.
Kim of Daiwa Capital stated they count on “rising alternatives associated to AI demand in 2024” for Samsung.
“Along with supplying HBM3 to Nvidia ranging from 4Q23 and increasing provide in 2024, we count on that Samsung Electronics will provide HBM3P, focusing on next-gen AI GPUs from mid-2024,” stated Kim in an Oct. 3 be aware.
