Samsung Electronics Announces Results for Third Quarter of 2024

Quarterly revenue of KRW 79.1 trillion, operating profit at KRW 9.18 trillion

Company to focus on technological leadership in components and premium products with AI features

Samsung Electronics today reported financial results for the third quarter ended Sept. 30, 2024.

The Company posted KRW 79.1 trillion in consolidated revenue, an increase of 7% from the previous quarter, on the back of the launch effects of new smartphone models and increased sales of high-end memory products. Operating profit declined to KRW 9.18 trillion, largely due to one-off costs, including the provision of incentives in the Device Solutions (DS) Division.

The strength of the Korean won against the U.S. dollar resulted in a negative impact on company-wide operating profit of about KRW 0.5 trillion compared to the previous quarter.

In the fourth quarter, while memory demand for mobile and PC may encounter softness, growth in AI will keep demand at robust levels. Against this backdrop, the Company will concentrate on driving sales   of High Bandwidth Memory (HBM) and high-density products. The Foundry Business aims to increase order volumes by enhancing advanced process technologies. Samsung Display Corporation (SDC) expects the demand of flagship products from major customers to continue, while maintaining a quite conservative outlook on its performance. The Device eXperience (DX) Division will continue to focus on premium products, but sales are expected to decline slightly compared to the previous quarter.

For 2025, the Company will remain focused on enhancing competitiveness in advanced technologies and strengthening leadership in premium products and AI capabilities amid ongoing macroeconomic uncertainties. The DS Division will address demand for differentiated products based on advanced technologies and high value-added products such as HBM and server SSDs. In addition, the Company plans to leverage the mass production on the 2 nanometer (nm) Gate-All-Around (GAA) process to win new clients. SDC will aim to maintain leadership in the high-end product category and broaden its product portfolio. The DX Division will continue to deliver exceptional customer experiences through enhanced AI features and product connectivity.

With over 500 million diverse products being delivered to consumers globally every year, the Company is tailoring its AI technology in each product to help lead the market. By leveraging the SmartThings platform with 360 million users and capabilities in product intelligence, spatial intelligence, and personalization, the Company plans to firmly establish itself in the home of the future, where AI will be widespread. In the AI era for the home, the Company will focus on the security of its products, convenience in device connectivity, intelligent technology to save energy and time, and the health and well-being of users and their family.

Memory Achieves Revenue Growth in Q3

The DS Division posted KRW 29.27 trillion in consolidated revenue and KRW 3.86 trillion in operating profit in the third quarter.

For the Memory Business, demand for AI and conventional servers was strong, as major datacenter and technology companies continued to invest. But mobile demand was relatively soft due to inventory adjustments by some customers, and the supply-demand situation was impacted somewhat by the increasing supply of legacy products in the China market.

The Company focused on actively responding to the demand for AI and server products while depleting aging inventories of legacy products to further improve the inventory level and mix. Therefore, compared to the previous quarter, the Company achieved significant revenue growth in HBM, DDR5 and Server SSD.

However, performance decreased due to a reduced reversal of inventory valuation loss compared to the previous quarter, one-off expenses such as the provision of incentives, and currency effects due to a weak dollar.

For the fourth quarter, the demand trends experienced in the previous quarter are expected to continue. The Company plans to accelerate the conversion of cutting-edge nodes in legacy lines and aims to strengthen its business fundamentals by completing the normalization of the inventory level and mix by the end of the year.

For DRAM, the Company plans to expand sales in line with the increase in HBM capacity, accelerate the transition to 1b nanometer[1] for server DDR5 and actively expand the sales portion of high-density modules based on 32Gb DDR5. For NAND, the Company will expand sales of 8th generation (V8) based PCIe Gen5 and plans to mass-produce the 64TB product for the quad-level cell (QLC) market, which has high growth potential.

Looking ahead to 2025, datacenter and enterprise investments are likely to remain strong in association with AI, and build demand for conventional servers, in addition to AI servers, is expected to be steadily strong.

For DRAM, the Company plans to expand the sales of HBM3E and the portion of high-end products such as DDR5 modules with 128GB density or higher for servers and LPDDR5X for mobile, PC, servers, and so on. For NAND, the Company will proactively respond to the high-density trend based on QLC products — including 64TB and 128TB SSDs — and solidify leadership in the PCIe Gen5 market by accelerating the tech migration from V6 to V8.

The System LSI Business posted modest sales growth, but earnings declined due to increased one-off costs. System-on-chip (SoC) shipments increased as flagship products were adopted for new models by a major customer. Sales of image sensors were affected by H1’s inventory accumulation, resulting in some adjustments, while display driver IC (DDI) sales expanded with new model launches by key customers.

In the fourth quarter, supply of the Exynos 2400 will continue to expand with higher customer adoption, but weak demand for image sensors is expected to continue. For DDIs, the System LSI Business is focusing on growth areas, such as the expansion of IT-oriented OLED products.

Looking ahead to 2025, the momentum of on-device AI is expected to remain strong, and the Company will focus on capturing opportunities in areas such as SoCs and cameras. The System LSI Business plans to concentrate on supplying SoCs for flagship products of a major customer while preparing for next-generation 2nm products. Image sensors will aim to maximize new product supply through HDR, low-power and zoom features, while DDIs will seek to develop low-power products using advanced processes.

The Foundry Business saw its overall earnings decline compared to the previous quarter due to the impact of one-off costs. Still, the Foundry Business successfully met its order targets — particularly in sub-5nm technologies — and released the 2nm GAA process design kit (PDK), enabling customers to proceed with their product designs.

While mobile and PC demand may remain weak in the fourth quarter, high performance computing (HPC) and AI-related demand will continue to be robust. The Foundry Business will strive to acquire customers by improving the process maturity of its 2nm GAA technology, and it will continue to develop competitive technology and design infrastructure to expand additional business opportunities.

For 2025, the overall foundry market is expected to show double-digit growth, driven by HPC and AI applications in advanced technology nodes. The Foundry Business aims to expand revenue through ongoing yield improvements in advanced technology while securing major customers through successful 2nm mass production. In addition, integrating advanced process nodes and packaging solutions to further develop the HBM buffer die is expected to help acquire new customers in the AI and HPC sectors.

Mobile Display Records Solid Results; Will Maintain Leadership in the High-End Market

SDC posted KRW 8.0 trillion in consolidated revenue and KRW 1.51 trillion in operating profit for the third quarter.

For the mobile display business, SDC achieved sequential improvements in both sales and profits thanks to the flagship product launches of major customers. For the large display business, SDC reported a slight weakening in operating profit, but sales volume improved from the previous quarter, driven by the stable demand of TV and monitor products.

In the fourth quarter, SDC expects continued demand for flagship products from major customers, and sales growth of IT and automotive products. However, SDC’s performance outlook is quite conservative compared to the previous quarter, due to headwinds from rising competition among panel makers.

For the large display business, SDC will keep striving to expand sales by meeting the fourth quarter demand of major customers through improved production efficiency, and it aims to respond to the demand for new products in 2025 with timely supply.

In 2025, SDC will continue to maintain its leadership in the foldable and high-end smartphone markets, based on innovative OLED technologies optimized for AI devices and accelerate the expansion of IT and automotive products to further diversify its business portfolio.

For the large display business, SDC will continue to leverage the performance advantage of QD-OLED panels to strengthen its position in the premium TV market. And for monitors, SDC will broaden its lineup by adding high-resolution products and diverse refresh rate options, aiming not only to solidify its competitive edge in the gaming monitor market but also to actively enter the B2C monitor market.

MX Business To Achieve Double-Digit Annual Sales Growth in Flagships

The MX and Networks businesses posted KRW 30.52 trillion in consolidated revenue and KRW 2.82 trillion in operating profit for the third quarter.

Overall market demand for smartphones grew modestly as the residual effects of global inflation slowed the recovery in consumer spending.

The MX Business recorded sequential growth in both revenue and operating profit, bolstered by the launch of new smartphone, tablet and wearable products. Sales increased — with a focus on flagship models — and profitability neared double digits, despite rising material costs as product specifications improved to boost competitiveness.

In the fourth quarter, seasonal factors are expected to lead to sequential growth in the smartphone market. At the same time, competition in the mass market segment is expected to increase as a result of rising demand, particularly in emerging markets.

The MX Business will continue to maintain solid sales of its AI smartphones, such as foldables and the S24 series, with various sales promotions in anticipation of the holiday season, aiming for annual flagship sales growth of double digits. In addition, the MX Business will expand sales linked to year-end seasonality for tablets and wearables, especially on new premium products with significantly enhanced performance, to contribute to the MX Business’ sales and profits.

In 2025, the macroeconomic environment is expected to stabilize to a degree as a result of interest rate cuts, leading to slight growth in the smartphone market. The mass market segment is expected to grow, along with demand for ecosystem products, and the smartwatch and true wireless stereo (TWS) markets will expand with broader applications of AI capabilities.

The MX Business will drive sales growth and improve profitability with a focus on flagship products, including smartphones, foldables, tablets and wearables, based on further advancements of Galaxy AI.

Visual Display To Focus on Premium Models and Service Expansion

The Visual Display and Digital Appliances businesses posted KRW 14.14 trillion in consolidated revenue and KRW 0.53 trillion in operating profit in the third quarter.

The Visual Display Business saw improved profitability both from the previous quarter and a year earlier by prioritizing sales of strategic products such as Neo QLEDs, OLEDs, and big TVs. Additionally, service business sales increased.

In the fourth quarter, overall demand in the TV market is expected to recover due to year-end peak seasonality amid intensifying competition. The Visual Display Business plans to capture peak season demand by enhancing sales program through strategic collaborations with major retail partners, and will focus on expanding sales and securing profitability by emphasizing the competitiveness of TVs in terms of security, design, and content.

In 2025, the overall TV market is expected to post modest growth, with strategic products like QLEDs, OLEDs, and big TVs continuing to gain market share. To solidify its leading position globally, the Visual Display Business will continue to differentiate AI functionalities and innovate its products centering on premium and Lifestyle screens.

By utilizing AI, the Company aims to enhance core TV features such as picture and sound quality, while also improving the overall user experience within the SmartThings ecosystem. The Company plans to drive sales of premium products centered on Neo QLED, OLED and super big TVs, and it will maintain leadership in the Lifestyle screen category by leveraging well-established competitive advantages.

Furthermore, by capitalizing on the extensive installed base that has been established through hardware leadership, the Visual Display Business will continue to expand the service platform business through advertisement and media such as Samsung TV Plus.

[1] Refers to Samsung’s fifth-generation 10nm class DRAM.