Samsung Stock Dips, Q1 EBIT Estimates Rise on Chip Success

On Friday, Samsung revealed that it expects its operating first-quarter profit to surge, topping the market anticipation as chip prices recover on artificial intelligence (AI) success.

In the Asian afternoon session, the South Korea-based company’s stock declined by -1.52% to ₩84,000.00 ($62.13) apiece.

Moreover, investors are weary as the firm’s share continues to stumble, with a -1.1% decline in the South Korean market, as they await reports on development in its high-end memory chip business that has been falling behind competitors.

Meanwhile, the company anticipated its earnings before interest and tax (EBIT) to climb ₩6.60 trillion ($4.89 billion) in the quarter, missing experts’ ₩5.70 trillion ($4.21 billion) estimation.

Samsung’s current revenue stood at ₩67.78 billion ($50.12 million), worsening analysts’ forecast of ₩68.71 billion ($50.81 million).

The expected profit growth was 931.00% from ₩640.00 billion last year, marking the smartphone maker’s skyrocketed operating profit since Q3 2022.

According to an analyst, since revenue was mainly in line, but EBIT beat anticipations, the inventory valuation of NAND flash chips may have been boosted. Demand for the chip has been tweaked, which can also enhance margins.

The expert added that the fresh Galaxy S24 had attributed positive results to on-device AI. Also, if the smartphone surpassed high-margin premium sales, it would have a payoff.

Chip Price Recovers on Samsung’s Weak Post-Pandemic Demand

Samsung’s chip sector is anticipated to report first-quarter profit as memory prices recover from weak post-pandemic gadget demand.

According to reports, Dynamic Random Access Memory (DRAM) chip prices saw a 20.00% climb during Q1, better than in the previous quarter. Moreover, NAND flash chips rose by 23.00% to 28.00%.

The bullish stance for memory chip demand, including booming appetite for chips like high-bandwidth memory (HBM), which is used in AI chipsets, has led Samsung to increase 34.00% last year, missing a 10.00% gain in the broader market.

However, it has been outpaced by its rival, SK Hynix, whose shares surged by 122.00% during the same period in the solid HBM market due to its relatively late entry into the unit.

Moreover, experts anticipate the firm will keep up gradually as it aims to start shipments of its newest and most potent HBM chips in Q3.

User Review
0 (0 votes)


Leave a Reply