In 2023, Samsung faced significant profit challenges reminiscent of the global financial crisis of 2008. It reported a historic loss in July and warned investors in October of an anticipated 80 percent quarterly profit decline.
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The downturn was primarily attributed to its computer chip manufacturing division, formerly a top-earning segment. This sector experienced a substantial decrease in demand due to global economic instability and renewed consumer spending caution.
However, recent developments suggest a turnaround for the South Korean tech giant in its first-quarter results.
According to its latest earnings guidance, Samsung projected its operating profits to increase more than tenfold compared to the first quarter of 2023. It anticipates profits of approximately 6.6 trillion Won, equivalent to $4.89 billion.
This represents a staggering 931 percent rise from the same period the previous year and is expected to be Samsung’s highest profit since the third quarter of 2022. The dramatic shift in fortune is largely credited to advancements in AI technology.
The newly released Galaxy S24 smartphone series exceeded sales expectations in the quarter, boosted by onboard AI capabilities from Galaxy AI. While Galaxy AI offers some enhancements, it still lags behind industry leaders like OpenAI.
The primary driver of Samsung’s improved profitability, however, was the industry-wide recovery in computer chip prices, fueled by an AI-driven market surge. NVIDIA, a key player in this arena, asserted its dominance in AI processors throughout 2023 and unveiled its most powerful AI-driven silicon, the Blackwell, this year.
Despite the rebounding profits, Samsung’s stock failed to sway investors, with shares dropping by 1.3 percent on Friday morning. Nevertheless, performance has shown signs of improvement since then.
