Samsung Electronics reported a decline in fourth-quarter operating profit compared to the previous quarter, despite posting revenue that exceeded market expectations.
The decline was attributed to higher research and development (R&D) expenses in its semiconductor division.
Following the earnings announcement, shares of the Korean giant slipped around 2% on Friday.
Samsung Q4 numbers and guidance
Samsung reported fourth-quarter revenue of KRW 75.8 trillion ($52.2 billion), slightly above the KRW 75.4 trillion estimated by LSEG SmartEstimate.
Operating profit stood at KRW 6.5 trillion, lower than the KRW 6.8 trillion projected by analysts.
On a year-on-year basis, revenue increased by 12%, while operating profit grew by 130% compared to the same period last year.
However, when compared to the previous quarter, revenue declined by more than 4%, and operating profit dropped by nearly 30%.
Net income for the October-December period rose 22.2% to KRW 7.75 trillion ($5.4 billion) from KRW 6.34 trillion a year earlier.
The results were largely in line with Samsung’s guidance, which had projected fourth-quarter revenue of KRW 75 trillion and operating profit in the range of KRW 6.5 trillion.
For the full year, Samsung reported a revenue of KRW 300.9 trillion, an increase from KRW 258.94 trillion in 2023. Annual operating profit rose to KRW 32.7 trillion, significantly higher than the KRW 6.57 trillion recorded in the previous year.
The company noted that while fourth-quarter revenue and profit declined on a quarter-on-quarter basis, annual revenue was the second-highest on record, surpassed only in 2022.
Samsung stated that it expects earnings to remain under pressure in the near term, particularly due to continued weakness in its semiconductor business. However, it aims to drive future growth through AI-enabled smartphones and other premium product offerings.
The company also highlighted plans for 2025, focusing on advancing AI-related technologies, expanding high-value semiconductor production, and strengthening its presence in premium consumer segments.
Samsung plans to boost sales with new flagship models, including the recently launched Galaxy S25 series.
Samsung’s semiconductor business performance
Samsung’s semiconductor division, which includes its memory chip business, reported an operating profit of KRW 2.9 trillion in the fourth quarter. This marked a more than 25% decline from the previous quarter.
Despite the decline in profit, the segment achieved record-high fourth-quarter revenue of KRW 30.1 trillion, supported by strong demand for advanced memory products used in AI applications. Samsung attributed the drop in profit to:
- Higher R&D expenses aimed at securing long-term technology leadership
- Initial ramp-up costs associated with increasing production capacity for cutting-edge semiconductor nodes
Samsung is a key supplier of DRAM (dynamic random access memory) and NAND flash memory, both of which are critical for data processing and storage.
However, the company faces growing competition from SK Hynix, which has taken the lead in high-bandwidth memory (HBM)—a type of DRAM optimized for AI workloads and used in applications such as large-scale machine learning models.
Samsung stated that it is adjusting its product mix by reducing production of legacy memory products and increasing the share of high-value memory solutions, including HBM.
The company expects overall memory market demand to recover from the second quarter of 2025, though earnings in the near term are anticipated to remain weak.
Samsung’s smartphone segment Performance
Samsung’s Mobile eXperience (MX) and Networks division, which includes smartphones, tablets, wearables, and related network equipment, saw a sequential decline in revenue and operating profit in the fourth quarter.
This was attributed to the fading impact of new flagship model launches, which had driven stronger performance in the prior quarter.
For the quarter, the division reported:
- Revenue of KRW 25.8 trillion
- Operating profit of KRW 2.1 trillion
Despite the quarterly decline, Samsung noted that full-year sales of flagship smartphones were strong, supported by double-digit growth in the Galaxy S24 series.
The company also saw increased sales of tablets and wearables, both in terms of shipment volume and overall value.
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