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Samsung’s Preliminary Q4 Profit Falls Far Short of Estimates as Chip Issues Drag

Samsung Electronics’ booth is seen during Korea Electronics Show 2024 in Seoul, South Korea, October 23, 2024. (Reuters)
Samsung Electronics’ booth is seen during Korea Electronics Show 2024 in Seoul, South Korea, October 23, 2024. (Reuters)
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Samsung’s Preliminary Q4 Profit Falls Far Short of Estimates as Chip Issues Drag

Samsung Electronics’ booth is seen during Korea Electronics Show 2024 in Seoul, South Korea, October 23, 2024. (Reuters)
Samsung Electronics’ booth is seen during Korea Electronics Show 2024 in Seoul, South Korea, October 23, 2024. (Reuters)

Samsung Electronics' preliminary fourth-quarter operating profit missed estimates by a large margin, with the South Korean tech giant hit hard by extra costs as it works towards providing high-end chips to Nvidia.

Its earnings were dented by rising research and development costs and the ramp-up of manufacturing capacity for advanced semiconductors, the company said in a statement. Slowing demand for conventional memory chips used in PCs and mobile phones also weighed on earnings, it added.

The world's largest memory chip, smartphone and TV maker expects to log an operating profit of 6.5 trillion won ($4.5 billion) for the three months ended Dec. 31, well below an LSEG SmartEstimate of 7.7 trillion won.

The expected profit is 131% higher than the same period a year earlier, but down 29% from a disappointing third quarter. Preliminary revenue came in at 75 trillion won, slightly lower than analysts' estimates.

Rival SK Hynix is Nvidia's main supplier of high-bandwidth memory (HBM) chips used in artificial intelligence graphics processing units (GPUs) whereas Samsung has struggled to meet Nvidia's requirements.

Nvidia CEO Jensen Huang told reporters in Las Vegas on Tuesday that Samsung has to "engineer a new design" to supply HBM chips to his company, adding that "they can do it and they are working very fast," Korea JoongAng Daily reported.

Samsung said at the time of its third-quarter earnings that it was making progress in supplying HBM chips to Nvidia but has not made any public updates since then.

Greg Noh, an analyst at Hyundai Motor Securities, said Samsung's profit was possibly eroded by one-off costs as well as disappointing chip and display earnings.

Samsung finished 3.4% higher with analysts attributing the gain to the sense that the company's woes had already been factored in and were unlikely to get worse.

"There are concerns about Samsung's major businesses continuing to lose competitiveness. But chip demand may have bottomed already," said Lee Min-hee, an analyst at BNK Investment & Securities, adding that smartphone demand in China may gradually improve.

Shares of Samsung, South Korea's biggest company by market value, slumped 32% last year, far more than a 10% decline for the wider market.

By contrast, SK Hynix is expected to post record earnings for the fourth quarter and its stock surged 23% last year.

Samsung will release detailed fourth-quarter results on Jan. 31.

RISING COMPETITION

Samsung said fourth-quarter earnings also fell for its division that designs and manufactures logic chips, hit by slower mobile phone demand, lower utilization rates at its factories and higher research and development costs.

The division may have widened losses to about $1.5 billion in the fourth quarter from about $960 million in the preceding quarter due to struggles to increase production yields, analysts said.

Earnings for its devices business, which includes mobile phones, TVs and household appliances, dropped as it has been some time since new mobile phone models were launched and because competition has increased, Samsung said.

Analysts said its mobile division earnings may have declined year on year due to lower sales for its premium foldable phones.

Slowing demand likely offset the positive impact of weakness in the local currency which boosts earnings from overseas.

The South Korean won dropped to its weakest level in 15 years in December after President Yoon Suk Yeol's martial law decree triggered political turmoil. It was also hurt by US President-elect Donald Trump's pledges of higher tariffs on imports.

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Technology

The ‘Worst in Show’ CES Products Put Your Data at Risk and Cause Waste

The Ultrahuman Rare luxury smart ring is on display at the Ultrahuman booth during the CES tech show Wednesday, Jan. 8, 2025, in Las Vegas. (AP Photo/John Locher)
The Ultrahuman Rare luxury smart ring is on display at the Ultrahuman booth during the CES tech show Wednesday, Jan. 8, 2025, in Las Vegas. (AP Photo/John Locher)
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The ‘Worst in Show’ CES Products Put Your Data at Risk and Cause Waste

The Ultrahuman Rare luxury smart ring is on display at the Ultrahuman booth during the CES tech show Wednesday, Jan. 8, 2025, in Las Vegas. (AP Photo/John Locher)
The Ultrahuman Rare luxury smart ring is on display at the Ultrahuman booth during the CES tech show Wednesday, Jan. 8, 2025, in Las Vegas. (AP Photo/John Locher)

So much of the technology showcased at CES includes gadgets made to improve consumers' lives — whether by leveraging AI to make devices that help people become more efficient, by creating companions to cure loneliness or by providing tools that help people with mental and physical health.
But not all innovation is good, according to a panel of self-described dystopia experts that has judged some products as “Worst in Show." The award that no company wants to win calls out the “least repairable, least private, and least sustainable products on display."
“We’re seeing more and more of these things that have basically surveillance technology built into them, and it enables some cool things,” Liz Chamberlain, director of sustainability at the e-commerce site iFixit told The Associated Press. “But it also means that now we’ve got microphones and cameras in our washing machines, refrigerators and that really is an industry-wide problem.”
The fourth annual contest announced its decisions Thursday.
A new smart ring every few years? Kyle Wiens, CEO of iFixit, awarded the Ultrahuman Rare Luxury Smart Ring the title of “least repairable.”
The rings, which come in colors like dune and desert sand, cost $2,200. Wiens said the jewelry “looks sleek but hides a major flaw: its battery only lasts 500 charges.” Worse, he said, is the fact that replacing the battery is impossible without destroying the device entirely.
“Luxury items may be fleeting, but two years of use for $2,200 is a new low,” he said.
An AI-powered smart crib? Bosch’s “Revol” crib uses sensors, cameras and AI that the company says can help monitor vital signs like how an infant is sleeping, their heart and respiratory rates and more. The crib can also rock gently if the baby needs help falling asleep and signal to parents if a blanket or other object is interfering with breathing.
The company says users can how and where their data is stored. Bosch also says the crib can be transformed into a desk as children get older.
But EFF Executive Director Cindy Cohn said the crib preys on parents' fears and “collects excessive data about babies via a camera, microphone, and even a radar sensor.”
“Parents expect safety and comfort — not surveillance and privacy risks — in their children’s cribs,” she said in the report.
Too much waste? Although AI is everywhere at CES, Stacey Higginbotham, a policy Fellow at Consumer Reports, felt that SoundHound AI’s In-Car Commerce Ecosystem, powered by its Automotive AI, pushes it to unnecessary extremes.
The feature “increases energy consumption, encourages wasteful takeout consumption and distracts drivers—all while adding little value,” Higginbotham said. That landed the in-car system as “least sustainable” on the list.
Vulnerable to hacking TP-Link's Archer BE900 router won for “least secure” of CES. The company is a top-selling router brand in the US But its products are vulnerable to hacking, said Paul Roberts, founder of The Security Ledger.
"By Chinese law, TP-Link must report security flaws to the government before alerting the public, creating a significant national security risk," he said. “Yet TP-Link showcased its Archer BE900 router at CES without addressing these vulnerabilities.”
Who asked for this? The awards also feature a category called “who asked for this?” Top of that list was Samsung's Bespoke AI Washing Machine, which Nathan Proctor, senior director of US PIRG, a consumer advocacy group, said is filled “with features no one needs,” including the ability to make phone calls.
“These add-ons only make the appliance more expensive, fragile, and harder to repair,” he said.
The worst overall Gay Gordon-Byrne, executive director of The Repair Association called the LG “AI Home Inside 2.0 Refrigerator with ThinkQ” the worst product overall. The fridge adds “flashy features,” Gordon-Byrne said, including a screen and internet connection.
“But these come at a cost,” Gordon-Byrne said. “Shorter software support, higher energy consumption, and expensive repairs reduce the fridge’s practical lifespan, leaving consumers with an expensive, wasteful gadget.”