Samsung's Profit Recovery Weakens in Q3

Samsung Electronics, the world's leading technology conglomerate, reported a decline in profits for the third quarter of 2023, signaling a weakening in its profit recovery. Despite a 12% increase in revenue to KRW 67.40 trillion, operating profit fell by 77.6% year-on-year to KRW 2.43 trillion. This performance was driven by a combination of factors, including currency fluctuations, product mix, and pricing strategies.


Currency fluctuations played a significant role in Samsung's Q3 earnings. The strengthening Korean won against major currencies, such as the US dollar and the euro, negatively impacted the company's overseas earnings. This currency headwind contributed to the decline in operating profit, as Samsung's revenue is primarily generated in foreign markets.

Samsung's product mix and pricing strategies also contributed to its profit decline. The company's memory business, which accounts for a significant portion of its revenue, faced a glut in the market, leading to a decline in average selling prices. Additionally, the company's focus on high-value-added products, such as premium smartphones and displays, did not offset the decline in memory chip prices.


Key drivers of Samsung's Q3 revenue growth included new smartphone releases and higher sales of premium display products. The company's Device Solutions (DS) Division, which includes the memory business, narrowed losses sequentially, while the System LSI Business posted a new quarterly high for new backlog from design wins. The mobile panel business also reported a significant increase in earnings, driven by new flagship model releases by major customers.

Looking ahead, Samsung expects uncertainties to persist in the fourth quarter, driven by geopolitical risks and ongoing customer inventory adjustments. However, the company is optimistic about the recovery of memory market conditions in 2024. Samsung plans to expand sales of high-bandwidth memory (HBM) products and address growing demand for new interfaces while increasing the portion of advanced nodes in its memory business. The company also expects to see improved results in its system semiconductor business, driven by new products for mobile customers.

In conclusion, Samsung's profit recovery weakened in the third quarter of 2023, primarily due to currency fluctuations, product mix, and pricing strategies. Despite the decline in profits, the company's revenue grew, driven by new smartphone releases and higher sales of premium display products. Looking ahead, Samsung remains optimistic about the recovery of memory market conditions in 2024 and plans to expand its sales of high-bandwidth memory products.