Samsung Electronics Reports Strong Q3 Revenue Amidst Market Challenges
Samsung Electronics has released its financial results for the third quarter of 2024, ending September 30. The company has achieved consolidated revenue of KRW 79.1 trillion, marking a 7% increase from the previous quarter. This growth was driven by the successful launch of new smartphone models and a rise in sales of high-end memory products. However, operating profit fell to KRW 9.18 trillion, primarily due to one-time costs like incentive provisions in the Device Solutions (DS) Division.
Impact of Currency Fluctuations
The Korean won’s strength against the U.S. dollar had a negative impact on the company’s operating profit, reducing it by approximately KRW 0.5 trillion compared to the previous quarter. Currency fluctuations often affect multinational corporations like Samsung, as they conduct business in various currencies.
Strategic Focus for Future Growth
Looking forward to the fourth quarter, Samsung anticipates a potential decline in memory demand for mobile and PC sectors. However, the growth of artificial intelligence (AI) is expected to sustain robust demand levels. In response, Samsung plans to focus on High Bandwidth Memory (HBM) and high-density products. The Foundry Business aims to increase orders by advancing process technologies.
Samsung Display Corporation (SDC) expects major customers to continue demanding flagship products, though it remains cautious about its overall performance. The Device eXperience (DX) Division will concentrate on premium products, but sales are forecasted to dip slightly from the previous quarter.
Technological Leadership and AI Integration
In 2025, Samsung is set to enhance its competitive edge in advanced technologies and strengthen its leadership in premium products and AI capabilities. The DS Division plans to address demand for differentiated products using advanced technologies, such as HBM and server SSDs. The company also intends to leverage mass production on the 2-nanometer (nm) Gate-All-Around (GAA) process to attract new clients.
SDC aims to maintain its leadership in high-end products while broadening its product portfolio. The DX Division will continue to enhance customer experiences through advanced AI features and improved product connectivity.
Samsung is committed to integrating AI into its diverse product range, delivering over 500 million items globally each year. By harnessing the SmartThings platform, which boasts 360 million users, Samsung is poised to lead in the future of AI-driven home environments. The company will prioritize product security, connectivity convenience, intelligent energy-saving technologies, and user health and well-being.
Memory Division Sees Revenue Growth
The DS Division has reported KRW 29.27 trillion in consolidated revenue and KRW 3.86 trillion in operating profit for Q3. The Memory Business witnessed strong demand for AI and conventional servers, driven by investments from major data center and tech companies. However, mobile demand remained soft due to inventory adjustments by some customers, and the supply-demand scenario was influenced by increased legacy product supplies in China.
Samsung focused on meeting the demand for AI and server products while reducing legacy product inventories to improve inventory levels and diversity. This strategy led to significant revenue growth in HBM, DDR5, and Server SSD compared to the previous quarter.
However, performance was affected by reduced inventory valuation loss reversals, one-off expenses like incentive provisions, and currency impacts due to a weak dollar.
Looking Ahead to 2025
In the fourth quarter, Samsung anticipates the continuation of demand trends from the previous quarter. The company aims to strengthen its business fundamentals by normalizing inventory levels and diversity by year-end.
For DRAM, Samsung plans to expand sales aligned with increased HBM capacity and accelerate the transition to 1b nanometer for server DDR5. It also seeks to expand high-density module sales based on 32Gb DDR5. For NAND, Samsung will boost sales of its 8th generation (V8) based PCIe Gen5 and plans to mass-produce 64TB quad-level cell (QLC) products, which have high growth potential.
System LSI and Foundry Business Updates
The System LSI Business saw modest sales growth, but earnings declined due to increased one-off costs. System-on-chip (SoC) shipments rose as flagship products were adopted by new models from a major customer. Image sensor sales were impacted by inventory accumulation, leading to adjustments, while display driver IC (DDI) sales expanded with new model launches from key customers.
In the fourth quarter, the supply of the Exynos 2400 is expected to expand with greater customer adoption, though weak demand for image sensors may persist. The System LSI Business focuses on growth areas, such as IT-oriented OLED products.
Looking to 2025, the momentum for on-device AI is expected to remain strong. Samsung plans to capture opportunities in SoCs and cameras, concentrating on supplying SoCs for flagship products of a major customer while preparing for next-generation 2nm products. Image sensors will focus on maximizing new product supply through features like HDR, low-power, and zoom, while DDIs aim to develop low-power products using advanced processes.
The Foundry Business experienced a decline in overall earnings compared to the previous quarter due to one-off costs. However, it successfully met order targets, especially in sub-5nm technologies, and released the 2nm GAA process design kit (PDK), enabling customers to proceed with product designs.
Mobile Display and MX Business Performance
SDC posted KRW 8.0 trillion in consolidated revenue and KRW 1.51 trillion in operating profit for Q3. The mobile display business achieved sequential improvements in both sales and profits due to flagship product launches. The large display business saw a slight weakening in operating profit but improved sales volume from the previous quarter.
In the fourth quarter, SDC anticipates continued demand for flagship products from major customers and sales growth in IT and automotive products. However, SDC’s performance outlook remains conservative due to rising competition among panel makers.
In 2025, SDC plans to maintain its leadership in the foldable and high-end smartphone markets, leveraging innovative OLED technologies optimized for AI devices. It aims to diversify its business portfolio by expanding into IT and automotive products.
The MX and Networks businesses reported KRW 30.52 trillion in consolidated revenue and KRW 2.82 trillion in operating profit for Q3. The smartphone market experienced modest growth as global inflation slowed consumer spending recovery.
The MX Business recorded sequential growth in both revenue and operating profit, driven by new smartphone, tablet, and wearable product launches. Sales focused on flagship models, and profitability neared double digits despite rising material costs.
In the fourth quarter, seasonal factors are expected to lead to smartphone market growth. The MX Business will maintain solid sales of AI smartphones, such as foldables and the S24 series, with various promotions during the holiday season. It also plans to expand sales linked to year-end seasonality for tablets and wearables, contributing to sales and profits.
Visual Display and Digital Appliances
The Visual Display and Digital Appliances businesses posted KRW 14.14 trillion in consolidated revenue and KRW 0.53 trillion in operating profit for Q3. The Visual Display Business improved profitability by prioritizing sales of strategic products like Neo QLEDs, OLEDs, and large TVs.
In the fourth quarter, TV market demand is expected to recover due to year-end peak seasonality. The Visual Display Business plans to capture peak season demand through strategic collaborations with major retail partners, focusing on expanding sales and securing profitability.
In 2025, the TV market is expected to show modest growth. The Visual Display Business will differentiate AI functionalities and innovate products centered on premium and lifestyle screens. By enhancing core TV features such as picture and sound quality, Samsung aims to improve the overall user experience within the SmartThings ecosystem.
By leveraging its extensive installed base and hardware leadership, the Visual Display Business will expand the service platform business through advertising and media such as Samsung TV Plus.
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