Samsung Optimistic about AI-Powered Smartphones Following Sales Defeat to Apple

Samsung experienced its fourth consecutive quarter of declining profits, concluding a challenging year that saw it lose its status as the world’s leading smartphone manufacturer. The South Korean tech giant revealed a 35% decrease in profit on Wednesday, underscoring the persistently sluggish demand for consumer devices and their associated chips.

In the December quarter, Samsung’s operating profits dwindled to 2.8 trillion won (approximately $2.1 billion), a notable decline from the 4.3 trillion won ($3.5 billion) reported a year earlier, aligning closely with the company’s earlier earnings projection for the period. Despite these setbacks, Samsung remains optimistic about a potential revival in mobile device demand in the coming year.

Addressing investors, the company expressed anticipation of a rebound in the smartphone market in 2024, particularly with the introduction of innovative products such as AI-powered smartphones, expected to stimulate demand. Apple overtook Samsung as the world’s leading smartphone seller in the fourth quarter of the past year, holding a 20.1% global market share compared to Samsung’s 19.4%, according to market research firm IDC.

Samsung acknowledged a decline in smartphone sales in the fourth quarter but noted an upswing in demand for high-end smartphones compared to the preceding three months. Tablet sales also experienced growth due to enticing new product launches.

Facing challenges on multiple fronts, Samsung grappled with the aftermath of a historic supply shortage during the COVID-19 pandemic, coupled with a drop in semiconductor demand over the past year amid global economic uncertainties. The company posted a significant loss of 14.9 trillion won (approximately $11.2 billion) for its device solutions unit, encompassing the memory chip business, in 2023, compared to a profit of 23.8 trillion won ($17.8 billion) the previous year.

Despite these setbacks, Samsung is cautiously optimistic about a gradual market recovery in the upcoming year. The firm observed a slight improvement in performance in the fourth quarter, as it commanded higher prices for memory chips compared to the previous quarter. However, Samsung acknowledged ongoing macroeconomic uncertainties and expects challenges in the near term. The company anticipates moderate improvement in earnings for the first half of 2024, with a more significant upturn projected for the second half of the year. Samsung shares dipped by 1.6% in Seoul on Wednesday.