Samsung's 2024: A Year of Strong Revenue, Shifting Profits
Samsung just dropped their financial report for the last quarter of 2024 and the entire year. It's a mixed bag. While they've pulled in some serious revenue, profits have taken a bit of a dip. Let's break down what's happening at the tech giant.
By the Numbers: 2024 in Review
For the whole of 2024, revenue reached a record high of KRW 300.9 trillion, their second on record, just behind the one set in 2022. But operating profit went another way and landed at KRW 32.7 trillion. By the fourth quarter alone-which falls between October and December-revenue was KRW 75.8 trillion, with an operating profit of KRW 6.5 trillion.
So, while they're still raking it in, the profit margin isn't quite what it used to be. Why the dip? Samsung points to softer market conditions, especially for IT products, and increased spending on things like research and development - which, in the long run, is probably a good thing.
Semiconductors: A Story of Two Halves
The semiconductor business of Samsung includes memory and foundry businesses, which recorded revenues of KRW 30.1 trillion and an operating profit of KRW 2.9 trillion in Q4.
Memory Business: Record Revenue, Future Focus
On the Memory side, the good news was that Q4 revenue reached a record, thanks to the increased average selling prices for DRAM, mainly for HBM and server DRAM. Net income, however, was slightly lower quarter over quarter due to the increased investment in R&D and ramping costs for new and advanced technologies. Moving forward, the company will prioritize high-value products like DDR5, LPDDR5x, and HBM to spearhead growth.
System LSI and Foundry: Challenges Now, Investments for Later
It also includes the System LSI business, which designs chips for processors, sensors, and other applications. The System LSI business reported lower earnings due to weaker mobile demand and higher R&D spending. However, it also lost money because of lower factory utilization and investments in R&D in next-generation technologies such as 2nm GAA in the Foundry business. Both businesses should have a slow start for 2025 but are pinning their hopes on the growth of advanced technologies and increase in demand in the later part of the year.
Display Division: Dealing with Competition
SDC accounts for the screens and a recorded revenue of KRW 8.1 trillion. It had an operating profit of KRW 0.9 trillion during Q4. The revenues were lower in comparison to previous quarters due to poor sales on smartphones and heavy competition in the mobile displays business. Large screen businesses-the big-sized displays for TVs-fared well owing to year-end sales of TVs.
For 2025, SDC is committed to maintaining top positions in the premium display market, making products more competitive, in particular, on high-end TVs and monitor product lines.
MX - Mobile & Networks: Flagship Phones & AI Over the Horizon
The MX division is its key money-maker and includes smartphones, tablets, and wearables. Combined with the Networks business, Q4 revenues reached 25.8 trillion KRW with an operating profit of 2.1 trillion KRW. Sales and profits were somewhat weaker than in the previous quarter, which was expected as some of the initial hype from new phone launches was beginning to fade.
However, flagship phone sales were robust for all of 2024, especially for the Galaxy S24 series with enhanced "Galaxy AI" features. Looking to 2025, Samsung would go full-scale in the integration of AI into mobile devices: pushing the sales of its new Galaxy S25 series and maintaining its top spot in the AI smartphone race by offering more personalized, advanced AI experiences. They're also looking to strengthen their foldable phone lineup and expand into new areas like XR devices.
Visual Display and Digital Appliances: Smart Home Vision AI
VD and DA businesses, including TVs and home appliances, recorded revenues of KRW 14.4 trillion and operating profit of KRW 0.2 trillion for Q4. The sales of the TV increased from Q4 mainly due to promotional activities during holiday seasons, and the profit plummeted due to severe competition amidst a pretty level playing field TV market.
For 2025, Samsung focused on their strategy called "Vision AI" in developing TVs and home appliances to incorporate AI. It means embedding AI into anything and making these home devices not just smart, but also well connected via its SmartThings system. They describe AI as very key to revenue growth, and in particular the TV market.
Outlook: AI and Premium Products are Keys
In all, Samsung's 2024 results paint a picture of a company navigating a complex market. Revenue is strong, but profit pressures are very real. Its strategy for 2025 seems clear: double down on AI across all product lines, focus on premium high-value products, and invest heavily in future technologies to maintain competitive advantage. It's going to be interesting to see how these bets pay off in the coming year.
