Samsung Electronics, South Korea’s largest company, reported a 35% decline in operating income to 2.8trn won ($2.1bn) for its latest quarter, falling approximately 24% below estimates.

The full-year 2023 results marked Samsung’s slimmest operating profit in 15 years, highlighting challenges in the smartphone and memory chip markets amid economic uncertainty.

The persistently sluggish demand for smartphones and memory chips crucial to modern electronics casts doubt on the anticipated tech sector recovery in 2024.

Samsung had previously predicted a gradual rebound in the $160bn memory market in 2024, driven by AI development. However, the recent results indicate a slower recovery than expected.

The consumer electronics unit faced challenges from intense competition and higher marketing costs, impacting profits from the smartphone business.

Despite the setbacks, there are signs of recovery in South Korea’s semiconductor industry, recording significant gains in both production and shipments in November.

Investors are keen to learn about Samsung’s long-term investment plans, especially in AI, as the company competes with SK Hynix in high-density memory chips. Samsung aims to increase its capacity by 2.5 times in 2024, focusing on advanced chips that handle data more efficiently for tasks such as training AI models.

The company is banking on a new lineup of devices and foldables to drive growth in 2024, unveiling its latest gadgets in the US later this month.

Executives are expected to provide more insights into Samsung’s future plans when the full results are released on January 31.

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By GlobalData