Samsung Q1 2024 earnings guidance: Memory chip prices rebound

Samsung Electronics on Friday said it expects to post a 931% increase in first quarter operating profit, as chip prices rebound.

Operating profit in the January-March quarter likely rose to 6.6 trillion Korean won ($4.89 billion), up 931% from a year ago, according to a preliminary statement. Profit in the first quarter of 2023 was 0.64 trillion won.

The profit guidance for the first quarter of 2024 exceeds LSEG’s estimate of 5.24 trillion won.

“We forecast Samsung Electronics will post solid earnings for 1Q24 driven by memory price hikes and robust S24 sales, beating market estimates,” said SK Kim, executive director and analyst at Daiwa Securities in a March 27 report.

“We expect the strong AI-driven memory upturn cycle will drive earnings in 2024-25E,” said Kim. Daiwa maintained their “buy” rating on Samsung Electronics and lifted price target to 110,000 won.

First quarter revenue likely rose 11.4% from the same period a year ago to 71 trillion won, the firm said in a preliminary earnings statement. LSEG analysts expect revenue of 71.8 trillion won.

Samsung is the world’s largest maker for dynamic random-access memory chips, which are found in consumer devices such as smartphones and computers.

Memory chip prices fell drastically last year, due to excess inventories post-Covid and weak demand for end products like smartphones and laptops.

In third-quarter earnings calls, both Samsung and the world’s second-largest DRAM chip maker SK Hynix signaled that memory chip demand weakness had finally bottomed out following production cuts.

Revenue from the global foundry industry rose about 10% sequentially in the fourth quarter, according to Counterpoint Research’s Foundry Services. However, on a year-on-year basis, revenue fell 3.5% during the three-month period.

“Despite lingering macroeconomic uncertainties, the industry started bottoming out in H2 2023, driven by supply chain inventory restocking demand in the smartphone and PC sectors,” said Counterpoint Research on April 2.

Samsung Electronics is expected to announce detailed earnings later this month.