The Company posted KRW 74.6 trillion in consolidated revenue, a decrease of 5.8% compared to the previous quarter. Operating profit decreased to KRW 4.7 trillion.

The Device Solutions (DS) Division reported an increase in revenue on the back of expanded sales of high density, high-performance memory products, but inventory value adjustments in memory and one-off costs related to the impacts of export restrictions related to China in non-memory had an adverse effect on profit. In the Device eXperience (DX) Division, operating profit declined quarter-on-quarter due to a sequential decline in sales volume following the launch of new smartphone models in the first quarter.

Looking ahead to H2, the DS Division plans to proactively meet the growing demand for high-value-added and AI-driven products and continue to strengthen competitiveness in advanced semiconductors. The DX Division will seek to minimize the impact of uncertainties stemming from tariff policies that are likely to persist.

Semiconductors Expected To Proactively Meet Continued AI Demand

The DS Division posted KRW 27.9 trillion in consolidated revenue and KRW 0.4 trillion in operating profit for the second quarter.

In Q2 2025, the Memory Business proactively addressed robust server demand by expanding HBM3E sales and by expanding the proportion of high-density DDR5 products. Also, with the resumption of datacenter projects that were previously delayed, sales of server SSDs increased, helping NAND inventory to decrease significantly. However, earnings were impacted by one-off costs such as inventory value adjustments.

In H2 2025, AI demand is expected to remain robust due to continued investments by major cloud service providers, and therefore server demand for both DRAM and NAND is expected to stay strong.

To align with solid AI-server demand for DRAM, the Memory Business will proactively address the need for high-density products and diversify product offerings through HBM, server LPDDR5x, high-density DDR5, 24Gb GDDR7 and other products. For NAND, the Memory Business plans to increase sales of high-density and high-performance SSDs while accelerating the transition to 8^th Generation V-NAND across all applications.

The System LSI Business generated solid revenue from shipments of flagship systems-on-a-chip (SoCs) using the Gate-All-Around (GAA) process, but earnings improvement was limited due to higher costs of developing advanced products.

In H2 2025, the System LSI Business will focus on improving Exynos competitiveness to ensure its adoption in 2026 flagship mobile lineups of a major customer and expanding the sales of ultra-high-resolution and nano-prism sensors.

Despite significant growth in revenue from the first quarter, earnings for the Foundry Business remained weak due to the impact of inventory value adjustments that stemmed from US export restrictions on advanced AI chips to China, as well as a continued low utilization rates at mature nodes.

In H2 2025, the Foundry Business will ramp up mass production of a new mobile SoC with the 2nm GAA process. It also aims to improve factory utilization and profitability through expanded sales to major customers.

SDC To Further Accelerate Leadership By Differentiating and Enhancing Display Technologies

Samsung Display Corporation (SDC) posted KRW 6.4 trillion in consolidated revenue and KRW 0.5 trillion in operating profit for the second quarter.

For the mobile display business, SDC saw a revenue increase based on the response to new smartphones of major customers as well as the expansion of sales in the IT and automotive segments. The large display business experienced continued growth in sales of QD-OLED monitor displays, driven by robust demand in the gaming market.

In H2 2025, the mobile display business expects sales growth from major customers’ new smartphone launches amid ongoing market uncertainties. It also aims to strengthen market leadership with differentiated technologies and the continued expansion of sales beyond smartphone displays. The large display business will seek to maintain a stable supply of TV panels while continuing to accelerate the penetration of QD-OLED monitors by enhancing the product lineup.

MX Grows Revenue and Operating Profit YoY, Will Focus on Flagship Sales and AI Capabilities

The Mobile eXperience (MX) and Networks businesses posted KRW 29.2 trillion in consolidated revenue and KRW 3.1 trillion in operating profit for the second quarter.

In Q2 2025, the MX Business experienced a decrease in smartphone shipments compared to Q1, when new models were released, but both revenue and operating profit grew YoY through robust sales of the Galaxy S25 series, Galaxy A series and Galaxy tablets. The Business also maintained solid double-digit profitability via efficient resource management.

In H2 2025, the MX Business plans to continue a flagship-first approach for smartphone sales focusing on foldables and the Galaxy S25 series — while emphasizing the AI functionality of the Galaxy A series — to increase market share. It will also reinforce the AI capabilities of tablets and wearables and expand the Galaxy ecosystem with the launch of products with new form-factors, including extended reality (XR) and TriFold devices, and contribute to maintaining solid profitability despite market uncertainties and rising bill of materials (BOM) costs.

The Networks Business improved profitability in Q2 2025 by expanding revenue in overseas markets and enhancing cost efficiencies, and in H2 2025, it will focus on achieving revenue targets and regaining competitiveness by securing new orders with optimized costs.

Visual Display Enhances Sales Mix, Targets the Capture of Peak-Season Demand in H2

The Visual Display and Digital Appliances businesses posted KRW 14.1 trillion in consolidated revenue and KRW 0.2 trillion in operating profit in the second quarter.

In Q2 2025, the Visual Display Business improved the sales of premium products, such as Neo QLED and OLED TVs, but earnings declined due to stagnant demand and intensified competition.

In H2 2025, the Business plans to reinforce revenue growth by capturing peak-season demand, based on a strengthened lineup of high-value-added TVs offering superior viewing experiences with enhanced AI features. In addition, the Business will drive solid profitability and growth through its differentiated experiences and services including SmartThings, Samsung Knox, Samsung Art Store and Samsung TV Plus.

The Company posted KRW 79.14 trillion in consolidated revenue, an all-time quarterly high, on the back of strong sales of flagship Galaxy S25 smartphones and high-value-added products. Operating profit increased to KRW 6.7 trillion despite headwinds for the DS Division, which experienced a decrease in quarterly revenue.

The Company has allocated its highest-ever annual R&D expenditure for 2024, and in the first quarter of this year, it has also increased its R&D expenditure by 16% compared to the same period last year, amounting to 9 trillion won.

Despite the growing macroeconomic uncertainties due to recent global trade tensions and slowing global economic growth, making it difficult to predict future performance, the Company will continue to make various efforts to secure growth. Additionally, assuming that the uncertainties are diminished, it expects its performance to improve in the second half of the year.

Semiconductors Projected To Continue Growth by Meeting Evolving AI Needs

The DS Division posted KRW 25.1 trillion in consolidated revenue and KRW 1.1 trillion in operating profit for the first quarter.

For the Memory Business, revenue was driven by expanded server DRAM sales and the addressing of additional NAND demand amid a perceived bottoming out of the market price.

However, overall earnings were impacted by the erosion of average selling price (ASP), as well as a decrease in HBM sales due to export controls on AI chips and deferred demand in anticipation of upcoming enhanced HBM3E products.

In Q2 2025, the Memory Business anticipates robust demand for AI servers and will therefore seek to strengthen our position in the high-value-added market via our server-centric portfolio, along with a ramp-up of the enhanced HBM3E 12H to meet initial demand. For NAND, the Memory Business seeks to enhance cost competitiveness by accelerating the transition to 8^th Generation V-NAND for all applications.

In H2 2025, AI-related demand is expected to remain high in conjunction with the launch of new GPUs. Therefore, the Memory Business will expand the sales of high-value-added products, including enhanced HBM3E 12H products and high density DDR5 modules of 128GB or higher.

In the mobile and PC markets, on-device AI is expected to proliferate, so the Memory Business will proactively respond to this shift in the business environment with its industry-leading 10.7Gbps LPDDR5x products.

Earnings at the System LSI Business improved modestly, due to an increased supply of high-resolution sensors and LSI products. This improvement came despite a sluggish smartphone market and the delayed adoption of the Company’s flagship system-on-a-chip (SoC).

In Q2 2025, the System LSI Business will maintain steady revenue by gaining SoC adoption by a major customer for new flagship models and capitalizing on the growing adoption of 200-megapixel sensors.

In H2 2025, the System LSI Business will expand its flagship SoC supply, proactively address demand for high-resolution main and telephoto camera sensors and expand its automotive sensor portfolio.

Earnings for the Foundry Business were muted due to sluggish seasonal mobile demand, inventory adjustments and stagnant fab utilization. However, the Business focused on the 2nm Gate-All-Around (GAA) process, improving yields and stabilizing the line while keeping the program on schedule, while also securing additional sub-5nm orders, specifically the 2nm and 4nm nodes for AI and HPC applications.

In Q2 2025, the Business will stabilize its 2nm process production and drive earnings improvement by actively addressing strong mobile and automotive demand in the United States. Looking ahead to H2 2025, the Foundry Business aims to start 2nm mass production and secure major 2nm orders and strengthen its specialty process portfolio on mature nodes.

SDC Aims To Navigate Challenges and Drive Growth With Differentiated Offerings

Samsung Display Corporation (SDC) posted KRW 5.9 trillion in consolidated revenue and KRW 0.5 trillion in operating profit for the first quarter.

For the mobile display business, SDC reported declining profits QoQ due to seasonality. The results of the large display business have improved via the launch of new QD-OLED monitor products for major clients.

In Q2 2025, the mobile display business maintains a conservative outlook on earnings while pursuing the stable supply of new products such as foldables. For the large display business, demand for gaming monitors is expected to grow due to the upcoming launches of new products.

In H2 2025, SDC aims to grow the mobile display business sales through differentiated technologies and products amid rising market uncertainties. For the large display business, SDC will strengthen its presence in both B2C and B2B monitor markets with diverse product lineups.

MX Achieves Revenue Growth, Continues To Expand AI Capabilities

The MX and Networks businesses posted KRW 37 trillion in consolidated revenue and KRW 4.3 trillion in operating profit for the first quarter.

The MX Business experienced QoQ growth in both revenue and operating profit thanks to the strong sales of its Galaxy S25 series, which features an advanced Galaxy AI experience. Enhanced cost competency and price declines for some components also contributed to solid double-digit profitability.

In Q2 2025, the MX Business plans to sustain flagship-centric sales amid weak seasonality by successfully launching the Galaxy S25 Edge. It will also expand its AI smartphone lineup through the introduction of “Awesome Intelligence” to the Galaxy A series.

In H2 2025, the MX Business will strengthen its foldable lineup by offering a differentiated AI user experience. In addition, the Business will launch new ecosystem products with enhanced AI and health capabilities, and explore new product segments such as XR.

Visual Display Posts Solid Performance, Strengthens Advanced AI Features

The Visual Display and Digital Appliances businesses posted KRW 14.5 trillion in consolidated revenue and KRW 0.3 trillion in operating profit in the first quarter.

The Visual Display Business recorded solid sales of strategic products such as Neo QLEDs, OLEDs, and large models of 75 inches and over, while price increases and material cost reductions resulted in improved QoQ profitability.

In Q2 2025, the Business intends to expand TV sales with its 2025 AI TV lineup and the integration of advanced AI functions.

In H2 2025, the Business will focus on capturing peak season demand by strategic collaboration with distributors, based on an enhanced AI TV lineup.

The Company posted KRW 75.8 trillion in consolidated revenue and KRW 6.5 trillion in operating profit in the quarter ended December 31, 2024. For the full year, it reported KRW 300.9 trillion in annual revenue and KRW 32.7 trillion in operating profit.

Although fourth quarter revenue and operating profit decreased on a quarter-on-quarter (QoQ) basis, annual revenue reached the second-highest on record, surpassed only in 2022. Meanwhile, operating profit was down KRW 2.7 trillion QoQ, due to soft market conditions especially for IT products, and an increase in expenditures including R&D.

In the first quarter of 2025, while overall earnings improvement may be limited due to weakness in the semiconductors business, the Company aims to pursue growth through increased sales of smartphones with differentiated AI experiences, as well as premium products in the Device eXperience (DX) Division.

For 2025 as a whole, the Company plans to enhance technological and product advantages in AI, continue to meet future demand for high-value-added products and drive sales growth in premium segments.

With market conditions expected to remain soft in 1H for the Device Solutions (DS) Division, the Company will focus on securing technology leadership for mid- to long-term growth. Samsung Display Corporation (SDC) will look to strengthen its leading position in high-end products by enhancing product competitiveness, and the DX Division will focus on extending its leadership in delivering AI experiences across a diverse product portfolio.

The Company’s capital expenditures in 2024 reached a total of KRW 53.6 trillion, including KRW 46.3 trillion spent in the DS Division and KRW 4.8 trillion in SDC. In the fourth quarter, the total was KRW 17.8 trillion, with KRW 16 trillion allocated to the DS Division and KRW 1 trillion to SDC.

Semiconductors To Optimize Portfolio Centered on Advanced Nodes

The DS Division posted KRW 30.1 trillion in consolidated revenue and KRW 2.9 trillion in operating profit in the fourth quarter of 2024.

The Memory Business achieved record-high fourth-quarter revenue, backed by a higher blended DRAM average selling price (ASP) due to the increased sales of high-bandwidth memory (HBM) and high-density DDR5 for servers. However, operating profit decreased slightly compared to the previous quarter as a result of increased R&D expenses to secure future technology leadership, as well as the initial ramp-up costs to secure production capacity for cutting-edge nodes.

In the first quarter of 2025, amid ongoing uncertainties in demand, the Memory Business will shift its business portfolio to more high-value-added products by accelerating the migration to cutting-edge nodes to respond to the demand for high-performance and high-density products.

For DRAM, the Memory Business seeks to increase the share of DDR5 and LPPDR5x shipments by accelerating the transition to the 1b nanometer (nm) process. As for NAND, the Business is executing the technology migration from V6 to V8 while increasing sales of V7 QLC-based server SSDs.

In 2025, overall memory market demand is expected to recover from the second quarter. The Memory Business is reducing the portion of legacy DRAM and NAND products to align with market demand and accelerating the migration to cutting-edge nodes. The Business will continue to strengthen its business competitiveness and optimize its portfolio by increasing the portion of high value-added products such as HBM, DDR5, LPDDR5x, GDDR7 and server SSDs based on advanced process nodes.

Earnings at the System LSI Business declined in the quarter due to weak mobile demand and higher R&D expenses to advance cutting-edge product development.

In the first quarter of 2025, earnings are expected to remain weak due to delayed entry into the flagship system-on-a-chip (SoC) market. However, demand for core products such as image sensors and DDI is expected to increase on the back of flagship smartphone launches.

In 2025, the System LSI Business will focus on further enhancing its flagship SoC through product optimization. For image sensors, the Business will proactively respond to high-resolution needs — such as for 200-megapixel (MP) telephoto and main cameras.

The overall profit for the Foundry Business decreased due to lower utilization rates and higher R&D expenses for advanced-node technology. Its 2nm GAA technology is under active development, with the design-kit (DK) already distributed to customers for product design, while the 4nm process is mass producing HPC products based on stable yields.

Looking ahead to the first quarter of 2025, earnings are expected to remain weak due to sluggish mobile demand and fixed-cost burden stemming from lower utilization rates. In this environment, the Foundry Business will concentrate on advancing leading-edge process development and enhancing process maturity to expand opportunities in AI and HPC applications and customer engagement for advanced nodes.

As for 2025, the Business will continue to secure orders from major customers by ramping up and stabilizing the 2nm GAA technology, while simultaneously bolstering the 4nm technology and design infrastructure to meet the growing mobile and HPC needs.

Display To Strengthen Product Competitiveness in 2025

SDC posted KRW 8.1 trillion in consolidated revenue and KRW 0.9 trillion in operating profit for the fourth quarter.

SDC reported declining profits QoQ due to sluggish smartphone demand and rising competition for the mobile display business, and achieved double-digit revenue growth QoQ for the large display business, with an increase in year-end TV sales.

In the first quarter of 2025, the earnings outlook for the mobile display business is conservative, as the overall smartphone market demand is expected to remain weak. For the large display business, TVs with enhanced image quality are scheduled to launch, as well as high-resolution monitors.

In 2025, SDC aims to sustain its leadership in the high-end segment by strengthening product competitiveness. For the large display business, SDC will increase sales of diversified high-performance TVs and monitors.

MX To Drive Flagship-Centric Sales, Reinforce Leadership in Mobile AI

The Mobile eXperience (MX) and Networks businesses posted KRW 25.8 trillion in consolidated revenue and KRW 2.1 trillion in operating profit for the fourth quarter.

The MX Business reported a QoQ decrease in sales and profit, in part due to the fading effects of new flagship model launches. However, on a full-year basis, flagship sales saw robust growth on the back of double-digit growth of the Galaxy S24 series featuring Galaxy AI, with tablets and wearables also increasing in both value and shipments.

In the first quarter of 2025, the MX Business plans to drive sales growth based on its flagship models, particularly the newly launched Galaxy S25 series, and will continue to lead the AI smartphone market through promotion of new AI experiences and product competitiveness.

In 2025, the MX Business will reinforce its mobile AI leadership by providing more personalized, differentiated AI experiences while also strengthening the foldable lineup to generate new customer demand. Additionally, the Business plans to expand sales by providing advanced AI features and rich Galaxy ecosystem experiences for premium tablets, notebooks, wearables and the upcoming XR device.

While prices of major components are expected to increase this year due to advancements in hardware specifications, the MX Business aims to improve profitability by continuing to build out Galaxy AI and expand sales centered on flagship products.

In the fourth quarter, the Networks Business reported significant improvements in revenue and operating profit in key markets. For 2025, performance is set to improve as the Business expects to win new orders and as major operators expand their network and increase adoption of virtualized and open radio access networks (vRAN/ORAN).

Vision AI Expected To Drive Growth for Visual Display

The Visual Display (VD) and Digital Appliances (DA) Businesses posted KRW 14.4 trillion in consolidated revenue and KRW 0.2 trillion in operating profit in the fourth quarter.

The VD Business saw revenue increase in the fourth quarter due to expanded sales and an improved sales mix through peak-season promotion, yet profitability decreased slightly as a result of increased cost from intensified competition amid largely stagnant TV demand.

In the first quarter of 2025, while overall TV demand is expected to decrease YoY due to growing domestic and global economic uncertainties, demand for high-value-added products is projected to remain solid. Business will try to improve profitability and expand strategic product sales through new model launches based on the Vision AI strategy for Samsung’s AI screens.

In 2025, the overall TV market is expected to grow slightly in major emerging markets. The VD Business plans to lead the AI screen market under Samsung’s “Home AI” vision, integrating AI into all connected device experiences based on the SmartThings platform and expand the adoption of Samsung Knox security solutions.

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.

Global IT demand and business environment expected to improve in H2 based on demand for AI applications

Samsung Electronics today reported financial results for the first quarter ended March 31, 2024.

The Company posted KRW 71.92 trillion in consolidated revenue on the back of strong sales of flagship Galaxy S24 smartphones and higher prices for memory semiconductors. Operating profit increased to KRW 6.61 trillion as the Memory Business returned to profit by addressing demand for high value-added products. The Mobile eXperience (MX) Business posted higher earnings and the Visual Display and Digital Appliances businesses also recorded increased profitability.

The weakness of the Korean won against major currencies resulted in a positive impact on company-wide operating profit of about KRW 0.3 trillion compared to the previous quarter.

The Company’s total capital expenditures in the first quarter stood at KRW 11.3 trillion, including KRW 9.7 trillion for the Device Solutions (DS) Division and KRW 1.1 trillion on Samsung Display Corporation (SDC). Spending on memory was focused on facilities and packaging technologies to address demand for High Bandwidth Memory (HBM), DDR5 and other advanced products, while foundry investments were concentrated on establishing infrastructure to meet medium- to long-term demand. Display investments were mainly made in IT OLED products and flexible display technologies.

Memory Business Returns to Profit; Second Quarter Expected to Remain Solid on AI Demand

The DS Division posted KRW 23.14 trillion in consolidated revenue and KRW 1.91 trillion in operating profit for the first quarter.

For servers and storage, demand for generative AI showed solid trends, while demand for DDR5 and high-density SSDs remained strong. For PCs and mobile overall, content-per-box continued to grow for both DRAM and NAND, and demand remained robust on the back of active sell-in driven primarily by Chinese mobile OEM customers.

The Memory Business returned to profit as it achieved qualitative growth by addressing the demand across servers, storage, PC and mobile, focusing on high-value-added products such as HBM, DDR5, server SSDs and UFS 4.0., along with the increase in ASP.

Looking ahead to the second quarter, the industry is expected to remain solid, led mainly by demand for generative AI.

For servers and storage, the continuous increase in the supply of AI servers and subsequent expansion of associated cloud services will increase demand not only for HBM but also for conventional servers and storage solutions. Demand for mobile is expected to be stable in the quarter, while PC customers are predicted to be affected by slow seasonality, making them likely to adjust their inventories ahead of new product launches in the second half of the year.

The Company started mass production of HBM3E 8H this month and plans to mass produce HBM3E 12H products and a 128GB product based on 1b nanometer¹ (nm) 32Gb DDR5 within the second quarter. The Company also started mass production of V9 NAND for the first time in the industry this month.

In the second half of 2024, business conditions are expected to remain positive with demand — mainly around generative AI — holding strong, despite continued volatility relating to macroeconomic trends and geopolitical issues.

For HBM, the Company will continue to increase supply in order to respond to growing demand for generative AI. In DRAM, the Company plans to accelerate 1b nanometer-based 32Gb DDR5 supply with faster ramp-up speeds and further strengthen its competitiveness in the high-density DDR5 module market. For NAND, the Company plans to enhance technology leadership by mass producing quad-level cell (QLC) for V9 in the third quarter.

The System LSI Business increased the supply of systems on chips (SoCs) and sensors for major customers’ new products, but earnings improvements have taken longer than anticipated as Display Driver IC² (DDI) sales were impacted by slowing panel demand.

With smartphone sell-out likely to show signs of recovery after a slow start, the System LSI Business will focus on providing a stable supply of flagship SoCs and sensors and is also preparing to ship products based on advanced technologies for new wearables.

For mobile sensors, the utilization rate is expected to remain high, including the mass production of 50MP products for global customers. For DDIs, sales are expected to continue expanding to meet demand from a major customer for new IT/TV products.

Amid a likely intensified pressure for component pricing, the System LSI Business will proactively adjust its product mix to navigate these challenges effectively.

The Foundry Business saw a delay in sales improvement due to weak market demand and continued inventory adjustments. Still, efficiency efforts in fab operations became more visible, which allowed it to narrow losses slightly.

The development of advanced 3nm and 2nm technologies is progressing smoothly, and 4nm technology yields have stabilized. This improvement in advanced technology competitiveness helped the Foundry Business achieve its highest ever order backlog in the first quarter.

Amid a likely gradual recovery in market conditions, second-quarter revenue is expected to rebound and reach double-digit quarter-on-quarter growth after bottoming in the first quarter.

The Foundry Business plans to complete the development of 2nm design infrastructure and prepare 4nm technology applicable to 3D IC. For mature technologies like 14nm and 8nm, it plans to prepare infrastructure for multiple applications.

In the second half of 2024, the foundry market is expected to see limited growth as uncertainties are likely to persist. However, the Foundry Business expects to outpace the market growth rate in annual sales thanks to increased sales of leading-edge technologies of 5nm and below. It will start mass production of Gate-All-Around (GAA) 3nm second-generation technology and improve the maturity of 2nm technology to focus on high-growth applications like AI and high-performance computing (HPC).

SDC To Focus on Flexible Displays and IT/Automotive, Aims for Sales Growth in Large Panels

SDC posted KRW 5.39 trillion in consolidated revenue and KRW 0.34 trillion in operating profit for the first quarter.

In the mobile display business, while intensifying competition led to a decline in earnings from the previous quarter, SDC ensured the timely supply of flexible displays for a major customer’s high-end smartphones and improved the utilization rate for rigid displays.

For the large display business, SDC narrowed losses on the back of new QD-OLED monitor products and a stronger customer base, despite an ongoing curb in demand.

While SDC expects sales to increase in mobile displays with the launch of new foldable phones from a major customer and stronger demand for IT products in the second quarter, earnings growth is likely to be impacted by intensifying competition.

As for large displays, SDC plans to address demand for TV panels for a major customer and seeks to expand sales of premium monitors.

In the second half of the year, SDC will focus on maintaining competitiveness by expanding the sales of flexible displays with low power consumption and improved durability while also continuing to replace LCD displays in smartphones with rigid display products. Furthermore, SDC plans to boost its IT and automotive businesses in order to diversify its business portfolio.

SDC aims to increase large display sales from the previous year by improving the production efficiency of QD-OLED displays and enhancing the product mix, focusing on high-valued-added offerings.

MX Business Posts Revenue Growth Amid Market Decline, Plans Continued Investment in AI

The MX and Networks businesses posted KRW 33.53 trillion in consolidated revenue and KRW 3.51 trillion in operating profit for the first quarter.

Market demand for premium and mid-range smartphone segments decreased sequentially in volume and value as the smartphone market entered the seasonally slower first quarter.

However, the MX Business achieved revenue and operating profit growth due to strong sales of the Galaxy S24 series and maintained solid double-digit profitability through continued efforts in resource optimization. In particular, Galaxy AI features on the S24, such as Circle to Search, continued to see high usage rates and contributed to sales growth.

In the second quarter, overall demand for smartphones is expected to decline sequentially due to seasonality. Accordingly, the MX Business expects smartphone shipments to decline and tablet shipments to remain consistent sequentially.

The MX Business will maintain its flagship-oriented sales approach in the second quarter by applying the Galaxy S24’s AI experience to other flagship models and maximizing product competitiveness. Additionally, the MX Business will aim to secure solid profitability by continuing to streamline operations in light of continued geopolitical instability and likely increases in the cost of key components. At the same time, the MX Business will remain committed to investing in R&D, including in AI, despite a challenging environment.

In the second half of the year, the smartphone market is expected to rebound due to stabilizing consumer sentiment, the expansion of AI products and services and economic growth in emerging markets.

The MX Business will seek annual growth in smartphone sales and aims to maintain sales momentum through the expansion of Galaxy AI to existing and new flagship products across foldable devices and tablets. For wearables, it will strengthen the Galaxy ecosystem experience through the expansion of new models and form factors like the Galaxy Ring. For smartwatches, the MX Business will strive to meet demand for upgrades through the launch of new premium models.

Additionally, the MX Business will continue to seek operational efficiencies to counter rising component costs to ensure solid annual profitability, and it will continue to invest in research and development to further expand and refine Galaxy AI.

Visual Display and Digital Appliances To Continue Breaking New Ground in the AI Era

The Visual Display and Digital Appliances businesses posted KRW 13.48 trillion in consolidated revenue and KRW 0.53 trillion in operating profit in the first quarter.

The Visual Display Business posted higher quarter-on-quarter profitability even as the overall market demand decreased by concentrating on premium products, such as Neo QLEDs, OLEDs and TVs above 75″. However, profitability declined year-on-year due to stagnant TV market demand and increased costs amid intensifying market competition.

In the second quarter, overall market demand is expected to remain weak due to declining TV demand in emerging markets, but major global sporting events may lead to opportunities to increase sales. The Visual Display Business will focus on securing profitability, enhancing sales of strategic products and strengthening operations management in each business segment.

In the second half of 2024, overall TV demand is expected to recover gradually amid an uncertain macroeconomic and geopolitical environment. The Visual Display Business will address diverse consumer needs while promoting “AI Screen Leadership,” driven by innovative premium TVs and Lifestyle screens. Additionally, it will provide differentiated customer experiences through connected devices and drive market growth by promoting advanced features based on security and sustainability, as well as boosting competitiveness in service businesses such as Samsung TV Plus.

¹ Refers to Samsung’s fifth-generation 10nm class DRAM.
² Integrated circuit.

Moderate first-half earnings recovery on macro uncertainties; 2H to show more significant improvement

Samsung Electronics Co., Ltd. today reported financial results for the fourth quarter and the fiscal year 2023.

The Company posted KRW 67.78 trillion in consolidated revenue and KRW 2.82 trillion in operating profit in the quarter ended December 31, 2023. For the full year, it reported KRW 258.94 trillion in annual revenue and KRW 6.57 trillion in operating profit.

Fourth quarter revenue and operating profit increased from the third quarter based on improved performance in Memory due to higher prices, and continued strength in sales of premium display products.

In the first quarter of 2024, the Company will focus on improving profitability by increasing sales of high value-added products. The component businesses aim to meet demand for advanced products and those aimed for generative AI while the Device eXperience (DX) Division will strengthen AI features in smartphones and other consumer products.

The memory market and demand for IT are expected to continue recovering in 2024, though macroeconomic uncertainties remain to be seen. The Company will meet demand for semiconductors for AI applications and expand into AI-enabled consumer product markets. At the same time, the Company will strengthen its leadership in premium products and competitiveness in advanced-node semiconductors.

As ongoing macroeconomic uncertainties are expected to weigh on the business environment in the near-term, the Company expects earnings in the first half of 2024 to show a moderate improvement, with a more significant improvement expected to take place in the second half of the year.

The Company’s capital expenditures in 2023 reached a total of KRW 53.1 trillion, including KRW 48.4 trillion spent in the Device Solutions (DS) Division and KRW 2.4 trillion in Samsung Display Corporation (SDC). In the fourth quarter, the total was KRW 16.4 trillion, with KRW 14.9 trillion allocated to the DS Division and KRW 0.8 trillion to SDC.

Spending on memory was concentrated on building out infrastructure at the facility in Pyeongtaek, Korea and expansion of production capacity of HBM, DDR5 and other advanced nodes. Foundry investments focused on expanding the production capacity of advanced EUV nodes of 5 nanometers (nm) and below, as well as infrastructure at the Company’s factory in Taylor, Texas. Display investments were mainly made in IT OLED products and flexible displays.

Semiconductor Demand To Recover Gradually in 2024

The DS Division posted KRW 21.69 trillion in consolidated revenue and KRW 2.18 trillion in operating losses in the fourth quarter of 2023.

For the Memory Business, the overall market showed a recovery compared to the previous quarter, with content-per-box continuing to increase for PC and mobile. Server demand showed signs of recovery as investments in generative AI expanded across the IT industry.

The Memory Business also focused on expanding sales of high value-added products, leading to significantly higher sales of cutting-edge solutions like HBM, DDR5, LPDDR5x and UFS 4.0, among others. As a result, its bit growth exceeded market growth, and inventory depletion of DRAM and NAND accelerated. The DRAM business posted a profit on the back of higher prices.

Looking to the first quarter of 2024, PC and mobile demand recovery is expected to continue, while server and storage demand will show signs of recovery, though market conditions need close monitoring. In terms of industry supply, bit growth of cutting-edge products is anticipated to face constraints across the market while consumer demand for advanced-node products is predicted to stay strong. The Memory Business will focus on responding to demand for cutting-edge products and intends to improve profitability by actively addressing demand for HBM and generative AI-related server SSDs.

In 2024, the Memory Business expects the market to continue to recover despite various potential obstacles, including interest rate policies and geopolitical issues. For PC and mobile, content-per-box is expected to grow due to the impact from expansion of on-device AI. As far as servers are concerned, server replacements and transitions to new platforms will likely lead to a gradual recovery in demand. Additionally, the Memory Business plans to focus on profitability based on the competitiveness of cutting-edge nodes.

For DRAM, the aim is to enhance leadership in the high-density DDR5 market and solidify competitiveness in HBM by ramping up the volume of next-generation HBM3E in a timely manner. For NAND, the Memory Business will respond to customer demand for high-density storage by being the first in the industry to enter the mobile QLC market, and by leading the Gen5 SSD market for generative AI applications.

Due in large part to inventory adjustments and the selection of Exynos 2400 for a major customer’s flagship model, the System LSI Business saw its earnings improve in the fourth quarter.

In the first quarter of 2024, sales of new SoCs and high-pixel image sensors are expected to remain strong. However, demand for some SoCs is expected to decline, and earnings are likely to worsen — mainly for mobile display driver IC (DDI) — so overall earnings improvement is predicted to be somewhat limited. However, the introduction of on-device AI provides an opportunity to restore the desire of consumers to replace their smartphones.

Although the smartphone market is expected to rebound in 2024, it is believed that the normalization of chip prices and higher financial costs will erode set makers’ promotional capabilities, limiting demand growth.

The System LSI Business will secure future growth engines by leveraging AI momentum and maximizing SoC, sensor and LSI business competitiveness. It plans to continuously improve on-device functions like NPU performance improvement and model weight reduction. For image sensors, it will expand sales of high-pixel sensors and DDIs and will achieve growth, even in uncertain environments, as IT devices adopt more OLEDs.

The Foundry Business saw its earnings decline in the fourth quarter due to a delay in global economic recovery. Despite these challenges, it is actively developing 3nm and 2nm Gate-All-Around (GAA) technology and plans to expand into newly emerging application segments using advanced process technologies. Furthermore, the Foundry Business achieved its highest annual order backlog in 2023.

In the first quarter of the year, it expects the launch of new products including AI smartphones and AI PCs to drive an improvement in demand. However, the ongoing trend of customers reducing inventory may mean that earnings will not significantly recover. Nevertheless, the Foundry Business is focused on improving yield and optimizing the second-generation 3nm GAA process. It is also securing a 2nm AI accelerator order that includes HBM and advanced packaging.

As demand for smartphones and PCs gradually recovers in 2024, advanced processes are expected to drive an approach to 2022 levels in the foundry market. The Foundry Business will continue stable mass production of the 3nm GAA process, develop the 2nm process and increase orders for fast growing applications such as AI accelerators.

Mobile Display To Focus on Smartphones and IT/Auto; Large Display To Improve Profitability

SDC posted KRW 9.66 trillion in consolidated revenue and KRW 2.01 trillion in operating profit for the fourth quarter.

For the mobile display business, the market demand for smartphones increased slightly year-on-year. Despite facing multiple challenges during the quarter, SDC maintained its performance compared to the previous quarter by ensuring a timely supply for major customers’ new products and focusing on high-end products in its product mix.

For the large display business, although demand remained weak due to unfavorable economic conditions, SDC posted sales growth and reduced losses backed by year-end seasonal TV demand.

In the first quarter of 2024, SDC expects a decline in mobile display business earnings due to intensifying competition among panel manufacturers and muted seasonal demand.

For the large display business, despite challenges posed by weak demand and off-season effects, SDC will continue its efforts to reduce losses by launching new QD-OLED monitors and expanding its customer base.

In 2024, the market demand for smartphones is expected to be sluggish due to the global economic slowdown and prolonged regional conflicts. Nevertheless, SDC aims to focus on sales growth based on differentiated technology and capabilities in the smartphone market, particularly in the highly competitive high-end segment. It also intends to strengthen its future growth engines in the IT and Auto segments.

Although ongoing macroeconomic uncertainties pose challenges to the large display business, SDC expects TV demand to recover moderately, buoyed by upcoming sporting events. It will closely monitor market developments and work towards improving profitability by centering QD-OLED monitors in its product mix, enhancing production efficiency and adding capacity without additional investments.

MX Maintains Double-Digit Profitability, Will Become Global Standard for Mobile AI with Galaxy AI

The MX and Networks Businesses posted KRW 25.04 trillion in consolidated revenue and KRW 2.73 trillion in operating profit for the fourth quarter.

Market demand for smartphones increased slightly quarter-on-quarter, driven by the premium segment, despite continued inflation and geopolitical instability.

The MX Business reported a decline in sales and profit quarter-on-quarter due to lower smartphone sales, including the fading of new-product effects from flagship models launched in the third quarter. However, tablet shipments, led by new product releases, grew significantly and included healthy sales of premium products. Wearable devices also maintained sales momentum during the peak holiday season.

In the first quarter of 2024, smartphone market demand is expected to decline sequentially due to seasonality, but the premium segment is expected to grow year-on-year. Accordingly, the MX Business plans to leverage the newly launched Galaxy S24 series – which brings advanced AI capabilities and enhanced product competitiveness – to expand sales of flagship products. The MX Business will also continue to focus on operational efficiency.

In 2024, smartphone market demand is expected to rebound as consumer sentiment stabilizes in anticipation of a global economic recovery, leading to market growth, especially in the premium segment. Similarly, the tablet market is expected to recover, while the wearables market is forecasted to achieve double-digit value growth for smartwatches and slight value growth for True Wireless Stereo (TWS) devices.

The MX Business aims to lead the AI smartphone market by offering customers a differentiated experience through the integration of Galaxy AI in the S24 series, while also enhancing the user experience and optimizing Galaxy AI for foldable devices. Through these efforts, the MX Business aims to grow its annual flagship shipments at a double-digit rate and solidify its leadership in the foldable category.

In addition, the MX Business will continue to focus on sales of premium devices for tablets. For wearables, it will strive to elevate the Galaxy ecosystem experience, enhance wellness functions in smartwatches and increase the smartphone attach rate by integrating AI technologies.

Through these efforts, the MX Business aims to achieve revenue growth and ensure solid profitability by continuing to optimize resources amid unstable market conditions. Finally, the MX Business will strengthen R&D and investment in future growth areas such as generative AI, digital health and XR.

Visual Display and Digital Appliances To Lead the AI Era

The Visual Display and Digital Appliances Businesses posted KRW 14.26 trillion in consolidated revenue and KRW 0.05 trillion in operating losses in the fourth quarter.

Overall market demand for TVs increased quarter-on-quarter in the fourth quarter, led by seasonality, but declined year-on-year due to reduced consumption sentiments among advanced markets.

The Visual Display Business expanded its leadership in the premium market by focusing on selling high-value-added products — including Neo QLEDs, OLEDs, and Big TVs above 75″ to preemptively respond to high demand during the peak season, including Black Friday.

However, profitability decreased slightly on a quarter-on-quarter and year-on-year basis due to the stagnant TV market demand and increased costs amid intensified competition.

In the first quarter of 2024, overall TV demand is expected to decrease owing to seasonality, apart from the premium market, including Neo QLEDs, OLEDs, and Big TVs above 75″, where solid demand is projected.

The Visual Display Business will amplify the buzz created by launching new premium models announced at CES and its showcase event First Look and, in order to focus on sales of strategic products and securing profitability, take a more proactive approach to promoting differentiated products and service.

In 2024, replacement demand linked to global sporting events is expected to ease the decline in TV market demand gradually. However, uncertainties surrounding various macro factors are anticipated to continue.

The Visual Display Business aims to innovate its premium and Lifestyle products and diversify its lineup to meet various customer needs. Furthermore, it will lead the AI-screen era by continuing to introduce innovations in hyper-connectivity and customized content and services, powered by its next-generation AI processor and Tizen operating system.

Memory market conditions to recover in 2024; macroeconomic uncertainties expected to persist

Samsung Electronics today reported financial results for the third quarter ended September 30, 2023.

Total consolidated revenue was KRW 67.40 trillion, a 12% increase from the previous quarter, mainly due to new smartphone releases and higher sales of premium display products. Operating profit rose sequentially to KRW 2.43 trillion based on strong sales of flagship models in mobile and strong demand for displays, as losses at the Device Solutions (DS) Division narrowed.

The Memory Business reduced losses sequentially as sales of high valued-added products and average selling prices somewhat increased. Earnings in system semiconductors were impacted by a delay in demand recovery for major applications, but the Foundry Business posted a new quarterly high for new backlog from design wins.

The mobile panel business reported a significant increase in earnings on the back of new flagship model releases by major customers, while the large panel business narrowed losses in the quarter.

The Device eXperience (DX) Division achieved solid results due to robust sales of premium smartphones and TVs. Revenue at the Networks Business declined in major overseas markets as mobile operators scaled back investments.

Harman posted a quarterly record in operating profit, led by higher sales of car audio products amid an overall increase in orders from automotive customers and also consumer audio products such as portable speakers.

In the fourth quarter, the DS Division will focus on sales of high value-added products such as High Bandwidth Memory (HBM) while also strengthening its technological leadership. Both the DX Division and Samsung Display Corporation (SDC) will seek to maintain solid profitability by focusing on premium markets.

The Memory Business plans to expand sales of HBM3 products and will address growing demand for new interfaces while increasing the portion of advanced nodes. System semiconductors are expected to post improved results on the back of new products for mobile customers.

SDC expects to maintain strong performance in the mobile panel business, driven by robust demand for premium OLED panels for smartphones. The large panel business will expand QD-OLED sales, led by year-end seasonal demand.

The DX Division will strive to maintain solid profitability by reinforcing strategies for flagship smartphones and expanding sales of premium tablets and wearable products. For TVs, the Company expects solid seasonal demand for high value-added models. The Networks Business will seek to secure new orders in overseas markets, while the Digital Appliances Business will focus on sales of premium products and strengthening the product mix.

Harman will seek to post another robust quarter by expanding sales of audio products during end-year seasonality as well as addressing the continuing demand for automotive products.

In 2024, while macroeconomic uncertainties are likely to persist, memory market conditions are expected to recover. The DS Division will seek to expand sales of advanced node products and plans to meet demand for high-performance, high-bandwidth products by increasing sales of HBM3 and HBM3E with the industry-leading HBM production capacity in the industry. For the Foundry Business, the second generation 3-nanometer (nm) Gate-All-Around (GAA) process will start mass production and operations will begin at its new factory in Taylor, Texas. Furthermore, in the Advanced Package business, production will begin, based on the multiple orders it has received from domestic and overseas HPC customers, including orders for the Company’s turnkey service that combines logic, HBM and 2.5D advanced packaging technologies.

For SDC, the mobile panel business plans to meet increasing demand for new applications, while the large panel business will improve profitability by adding new products and enhancing yields.

The DX Division will focus on the premium market by increasing sales of flagship smartphone models and innovative TV products. The Company plans to expand the application of AI, provide tailored hyper-connected experiences via SmartThings and secure technologies in new areas such as XR. The Networks Business will aim to increase revenue by seeking business opportunities overseas and reinforcing technology leadership in core 5G chips and virtualized Radio Access Network (vRAN) solutions.

The Digital Appliances Business plans to strengthen the leadership in premium segments with global launches of appliances featuring AI technology. The Company plans to continue advancing the connectivity experience between SmartThings-based digital appliances and other devices.

Harman is expected to secure orders in new areas including automotive displays and will address demand for high-growth products such as home audio equipment.

In the third quarter, Samsung Electronics’ capital expenditure reached KRW 11.4 trillion, including KRW 10.2 trillion spent in the Device Solutions (DS) Division and KRW 0.7 trillion in Samsung Display Corporation (SDC). The cumulative total for the January-September period is KRW 36.7 trillion, with KRW 33.4 trillion allocated to the DS Division and KRW 1.6 trillion to SDC.

The full-year capital expenditure for 2023 is expected at approximately KRW 53.7 trillion, including KRW 47.5 trillion allocated to the DS Division and KRW 3.1 trillion to SDC.

Spending on memory is expected to be concentrated in Pyeongtaek, which includes completing the P3 infrastructure and progressing the P4 framework for mid- to long-term supply. The Company remains committed to investing in new technologies, such as securing industry-leading HBM production capacity. Foundry investments are expected to increase from last year, centering on production capacity expansion in Pyeongtaek for the EUV process as well as for infrastructure investment in Taylor. For SDC, investments will mainly focus on expanding capacity for flexible displays and OLED products for IT applications.

Foundry Achieves Record Backlog From Design Wins; Memory Demand To Recover in 2024

The DS Division posted KRW 16.44 trillion in consolidated revenue and KRW 3.75 trillion in operating losses in the third quarter.

For the Memory Business, the PC and mobile demand improved by increasing adoption of high-density products in both DRAM and NAND and the completion of customers’ inventory adjustments. The server demand for generative AI-oriented, high-density and high-end products remained strong in comparison to the sluggish demand for conventional servers.

With a focus on improving profitability, the Memory Business continued to expand sales of advanced-node products such as HBM, DDR5, LPDDR5x and UFS 4.0, and it also strived to reduce inventory levels by production adjustment rather than by aggressive sales expansion.

Overall, bit growth came in under guidance but the average selling price (ASP) of both DRAM and NAND saw some decent increases when compared to the previous quarter.

Looking to the fourth quarter, thanks to effects of peak seasonality including year-end promotions and launches of new smartphones by major mobile customers, the demand for PCs and mobile is likely to improve. Additionally, the trend of high-density penetration for both PCs and mobile devices has been accelerating more than forecasted. Cloud service providers’ capital expenditure is concentrated on generative AI, so the associated server demand is expected to remain strong.

The Memory Business will expand the sales portion of highly profitable automotive products and HBM3 mass-volume business for major customers, in line with growing demand for generative AI. Through the ramp-up of Pyeongtaek Line 3, Samsung will proactively address the rising demand for new interfaces such as DDR5, LPDDR5x, PCIe Gen5 and UFS 4.0.

Looking ahead to 2024, PC and mobile demand is likely to benefit from the arrival of some replacement cycles for products sold during the initial phase of the pandemic. For DRAM, due to the spread of On-Device AI, the high-density trend in the flagship and high-end segments is expected to continue.

Overall memory demand is expected to recover gradually thanks to increasing demand for AI and normalizing inventory levels at customers, but various factors that can affect the server market — such as geopolitical issues and IT spending trends that are related to macroeconomic conditions and centered on generative AI — need to be continuously monitored.

In the third quarter, the System LSI Business posted a slower than expected improvement in earnings due to a delayed recovery in semiconductor demand and the impact from inventory adjustments.

During the quarter, the development of E2400 was completed, which has significantly improved performance for the CPU, GPU and NPU when compared to its predecessor. In addition, the Mobile Display Driver IC (DDI) achieved the highest quarterly sales this year on the back of a new product launched by customers, while the 200-megapixel image sensor has expanded the application from wide-angle cameras to telephoto cameras.

In the fourth quarter, the System LSI Business expects earnings to improve significantly, as supply to mobile customer’s new products is predicted to increase. The mobile SoC is in the final stages of development for next year’s flagship smartphones and is poised to expand the business portfolio by targeting global customers for the modem business, while also enhancing the solution capabilities for On-Device AI.

In 2024, as the mobile market is expected to pursue sales growth by increasing the portion of premium models, the System LSI Business will also seek growth by increasing sales of flagship products and expanding the business area beyond the mobile market.

Earnings at the Foundry Business remained weak as a slow recovery in major applications including mobile led to a delay in fab utilization rate improvement. However, the Foundry Business did achieve a quarterly record backlog for new design wins, centering on HPC applications.

In the fourth quarter, earnings are expected to improve as demand for semiconductors will likely increase with the launch of new products by major customers. The Foundry Business is stabilizing the GAA processes by continuously improving the yield of the second-generation 3nm process, and it also plans to secure a design infrastructure that reflects the Silicon results for 2nm.

Looking ahead to 2024, the foundry market is expected to return to a state of growth with the recovery in mobile demand and continuing increase in HPC demand. The Foundry Business plans to mass produce the second-generation 3nm process and the fourth-generation 4nm process for HPC applications. It will also strengthen the overall product portfolio by focusing on the development of specialty processes such as RF and eMRAM to expand into various applications such as HPC, automotive and consumer applications.

Mobile Display Posts Solid Results, Will Continue Focus on High-End Market

SDC posted KRW 8.22 trillion in consolidated revenue and KRW 1.94 trillion in operating profit for the third quarter.

For the mobile display business, SDC saw a slight increase quarter-on-quarter in market demand on the back of seasonal demand and launches of new products by major smartphone makers. SDC achieved solid results by focusing on premium OLED, with the polarizing trend intensifying between high-end and mid-range-and-below markets.

For the large display business, SDC saw earnings improve from the previous quarter as it concentrated on high-end products while strengthening operational fundamentals resulted in enhanced yields and reduced losses.

In the fourth quarter, SDC expects sales in the mobile display business to remain relatively strong thanks to seasonal effects in the smartphone and IT markets. However, growth may be limited as lingering inflation and rising interest rates impact consumer sentiment. SDC will strive to generate similar results quarter-on-quarter by leveraging competitiveness in the high-end market and featuring launches of new foldable products.

For the large display business, despite concerns over prolonged tepid demand due to the economic downturn, SDC will continue its efforts to reduce losses with an enhanced product mix including an increased share of monitors.

In 2024, in spite of persistent and adverse macro factors, SDC will seek to secure robust results by utilizing its wide capabilities, including preemptive investments, development of differentiated technologies and effective management to ensure stable quality and yield.

Furthermore, as its strategic customers are releasing new products featuring OLED in the foldable smartphone, IT OLED, automotive and gaming segments, SDC will actively promote OLED’s unique selling points and create a turning point in the market.

In particular, SDC will maintain its industry leadership by developing not only technology that caters to customer needs, but also a complete supply chain — both upstream and downstream — in the high-potential AR/VR markets.

Mobile Achieves Double-Digit Profit, Will Leverage Holiday Season in Q4

The MX and Networks businesses posted KRW 30.00 trillion in consolidated revenue and KRW 3.30 trillion in operating profit for the third quarter.

Overall market demand increased from the previous quarter, driven by a recovery in the global smartphone market. The sales and profitability of the MX Business increased quarter-on-quarter, driven by the successful launch of new flagship models. New foldable devices, tablets and wearables recorded strong sales, supported by a stable supply, and the Galaxy S23 series, launched in the first half of 2023, also maintained solid sales momentum.

In the fourth quarter, due to seasonality, the smartphone market is expected to grow and experience intensified competition, especially in the premium segment. Competition is also expected to increase in the mass-market segment, while market uncertainties are expected to remain due to ongoing geopolitical instability.

The MX Business will continue to maintain steady sales of its new foldable products and the Galaxy S23 series with various sales promotions in anticipation of the year-end holiday season. For tablets and wearables, the MX Business will expand sales with a focus on new premium products, leveraging seasonality and strengthening marketing campaigns in close collaboration with partners.

In 2024, smartphone market demand is expected to rebound as consumer sentiment stabilizes in anticipation of a global economic recovery, and growth in the premium segment is expected to continue. The premium segment of the tablet market is also expected to grow, while the smartwatch market is forecasted to achieve double-digit growth, with the True Wireless Stereo market set to grow modestly.

The MX Business will focus on further enhancing the smartphone experience for customers, seeking double-digit growth in annual flagship shipments and above-market smartphone revenue growth. For tablets, an emphasis will be placed on strengthening the premium product lineup, while for wearables, priority will be on expanding sales of new models and enhancing wellness features.

Moreover, the MX Business will advance generative AI technology in core features to deliver hyper-personalized experiences, as well as acquire technologies in future growth areas such as XR, Digital Health and Digital Wallet.

Through these efforts, the MX Business aims to achieve annual growth in revenue and profit in 2024 while optimizing resources to adapt to unstable market changes and improve profitability.

Visual Display and Digital Appliances To Focus on Securing Profitability

The Visual Display and Digital Appliances businesses posted KRW 13.71 trillion in consolidated revenue and KRW 0.38 trillion in operating profit in the third quarter.

Overall market demand for TVs increased quarter-on-quarter in the third quarter, led by seasonality, but declined year-on-year due to various macroeconomic factors affecting consumer demand.

The Visual Display Business improved year-on-year profitability as it expanded its leadership in the premium market to focus on selling high-value-added products — including Neo QLEDs, OLEDs and Super Big TVs — while reducing overall costs, especially material costs.

In the fourth quarter, demand uncertainty is expected to remain unresolved due to various risks in the business environment, apart from the premium market, where solid demand is projected.

The Visual Display Business will ensure the capture of peak-season demand by enhancing its competitiveness in both online and offline channels. In addition, it aims to secure profitability by improving its high-value-added product mix with Neo QLEDs, Lifestyle Screens and Super Big TVs.

In 2024, the TV market may fluctuate due to the external risks that were also present in 2023. However, consumer sentiment is expected to turn around from this year and slightly improve to alleviate the decline in market demand.

The Visual Display Business will continue to innovate TV products, focusing on premium and lifestyle screens, to lead the ultra-high-definition and ultra-large size TV market — especially targeting demand associated with major sports events scheduled in 2024.

The Visual Display Business will continue to center on the fundamentals of TV, including picture and sound quality, as well as other features that are highly valued in the market, to allow customers to enjoy differentiated screen experiences.

Macroeconomic uncertainties expected to persist; anticipates demand to begin recovering in 2H

Samsung Electronics today reported financial results for the fourth quarter and the fiscal year 2022.

The Company posted KRW 70.46 trillion in consolidated revenue and KRW 4.31 trillion in operating profit in the quarter ended December 31, 2022. For the full year, it reported 302.23 trillion in annual revenue, a record high, and KRW 43.38 trillion in operating profit.

The business environment deteriorated significantly in the fourth quarter due to weak demand amid a global economic slowdown. Earnings at the Memory Business decreased sharply as prices fell and customers continued to adjust inventory. The System LSI Business also saw a decline in earnings as sales of key products were weighed down by inventory adjustments in the industry. The Foundry Business posted a new record for quarterly revenue, while profit increased year-on-year on the back of advanced node capacity expansion as well as customer base and application area diversification.

Samsung Display Corporation (SDC) saw earnings in the mobile panel business decline as smartphone demand fell, while the large panel business narrowed its losses as sales of QD-OLED for TVs increased and as the business’s LCD inventory was fully depleted.

Revenue and profit at the Mobile eXperience (MX) Business declined amid weak demand in the mid- to low-end segments, while the Networks Business posted an increase in revenue led by domestic demand for 5G installations and expansion in overseas businesses.

The Visual Display Business posted higher revenue and operating profit as sales of premium products, including Neo QLED and Super Big TVs, increased, while the Digital Appliances Business saw a profit decline because of cost increase due to deteriorated market conditions and as competition intensified.

The strength in the US dollar against the Korean won resulted in a positive impact of approximately KRW 0.5 trillion company-wide on operating profit compared to the previous quarter.

The recent change in Korean tax law which revised taxation on dividends received from subsidiaries led to a decline in the Company’s corporate tax in the fourth quarter.

The one-time item due to the tax law change was reflected in the quarter’s financial statements and does not mean the Company received a corporate tax refund, nor is it related to the Company’s actual tax payment.

In the first quarter, the semiconductor business will focus on actively addressing the demand for high-end products, such as DDR5, LPDDR5x, and 200 megapixel (MP) image sensors, amid a weak memory market and soft global IT demand. SDC plans to meet the demand for major customers’ new products.

The Company plans to expand its leadership in the premium smartphone segment with the launch of Galaxy S23, while the Networks Business will focus on the domestic and overseas businesses, including North America. The Digital Appliances Business will aim to boost sales in the premium segment through new models, such as the BESPOKE Infinite Line.

For 2023, while the macroeconomic uncertainties are expected to persist, the Company anticipates demand to begin recovering in the second half. The semiconductor business will continue to reinforce market and technology leadership and expand the proportion of advanced nodes and products, such as DDR5, LPDDR5x, and Gate-All-Around (GAA) processes.

Earnings at SDC’s mobile panel business is expected to be robust, and the large panel business will focus on growing the QD-OLED business and improving profitability.

The Device eXperience (DX) Division plans to improve competitiveness by strengthening the premium product line-up, based on the Company’s technology leadership. The Division also plans to expand the SmartThings ecosystem through differentiated technologies and partnerships to provide customized, hyper-connected user experiences.

The Networks Business is expected to maintain revenue growth by actively responding to new market opportunities, particularly in overseas businesses, and by reinforcing technology leadership in 5G core chips and virtualized Radio Access Network (vRAN).

For the Digital Appliances Business, the Company will continue to provide hyper-connected user experiences based on SmartThings and enhance the competitiveness of premium products centered on BESPOKE models.

The Company’s capital expenditures in 2022 reached a total of KRW 53.1 trillion, including KRW 47.9 trillion for semiconductors and KRW 2.5 trillion for displays. In the fourth quarter, capital expenditures were KRW 20.2 trillion, with KRW 18.8 trillion in semiconductors and KRW 0.4 trillion in displays. Spending on memory was concentrated on investing in P3 and P4 infrastructure, in preparation for mid- to long-term bit supply, and in EUV to enhance competitiveness. Foundry investments focused on expanding the production capacity of advanced nodes at Pyeongtaek as well as on the initial capacity for 3 nanometer (nm) and the infrastructure for the Taylor site.

Memory Earnings Declined in Q4; Semiconductor to Focus on High-end Product Demand in Q1

The semiconductor businesses posted KRW 20.07 trillion in consolidated revenue and KRW 0.27 trillion in operating profit in the fourth quarter.

Overall memory demand weakened as customers continued to adjust their inventories amid deepening uncertainties in the external environment. In addition to the base effect that Bit growth was below the market level last quarter, Samsung achieved Bit growth that exceeded the market by expanding sales, focusing on server applications. But, due to worsened consumer sentiment caused by deepening macro issues, the price fell further and with the effect of a meaningful amount of inventory valuation loss, the result decreased significantly compared to the previous quarter.

For DRAM, demand for server was limited as Set build declined because of economic uncertainty and customers’ stance on inventory reduction remained. Mobile and PC demand was weak because of major customers’ continued inventory adjustments and Set build reduction. But the Company expanded the portion of cutting-edge nodes by optimizing its product portfolio and actively responded to the demand for high-density products focusing on major data centers and server OEM customers. For NAND, demand for server SSD was somewhat stagnant because of customers’ inventory adjustments.

Looking to the first quarter, customers’ inventory adjustment stance has remained unchanged as economic uncertainties continue. Although demand recovery momentum in the short-term is concerned, Samsung will continue to minimize any adverse impacts by actively addressing the demand for high-end products such as LPDDR5x, with timely preparation for fast-growing DDR5 demand for server and PC.

In 2023, based on cost competitiveness, the Memory Business plans to expand the proportion of high-value-added products by addressing the demand for high-density server SSDs, responds to the high-density trend of smartphones and PC, and strengthens its market leadership.

The System LSI Business saw its earnings decline in the fourth quarter due to sluggish sales caused by inventory adjustments and a decrease in sales for major components.

However, the mobile SoC business achieved its highest-ever full-year revenue, and the Automotive SoC business has solidified its mid- to long-term growth base by supplying an initial sample on schedule for a European premium OEM and by signing an MOU for product development with an autonomous driving solution company in the US.

In the first quarter, impacts of sluggish demand and inventory adjustments are expected to continue for the time being. Samsung will strive to expand sales of low- to mid-priced volume zone SoCs and 200MP image sensors. And for automotive SoCs, the Company will try to sustain growth momentum through additional orders from European premium OEMs and for self-driving products.

For 2023, Samsung expects the impacts of the economic downturn to continue for the time being. However, analysis of smartphone purchase patterns suggests that demand will continue to polarize between premium and low-priced phones.

In order to respond to this divided market, for SoCs, the Company will expand sales in the volume zone while reinforcing the position of its products for flagship devices. Samsung will also ensure its major smartphone OEM customers successfully launch flagship models by smoothly supplying and expanding the line-up of its differentiated 200MP image sensors.

The Foundry Business once again set a new record in the fourth quarter for quarterly revenue thanks to increased contributions from advanced nodes for customers, an increased portion from HPC, and the continuous evolution of mature processes; and its full-year sales also reached an all-time high. However, its utilization rate started to decline due to inventory adjustments.

Regarding next-generation GAA processes, the 3nm first-generation process is currently being mass-produced with a stable yield, and, based on the first-gen mass-production experience, the development of the 3nm second-generation process is progressing rapidly. In addition, for the process for automotive and following the mass production of 5nm, the Company started developing 4nm.

In the first quarter, Samsung expects the utilization rate to fall and earnings to decline accordingly due to weak demand.

In 2023, demand may fall temporarily in the first half of the year due to the economic slowdown and inventory adjustments. However, the Company expects market demand to recover in the second half, centering on HPC and Auto sectors.

Samsung will strive to win new customers for the 3nm second-generation process, to focus on the development of the first-generation 2nm process, and continue to develop specialty and mature processes to diversify within applications such as Automotive/IoT.

Finally, given the rising importance of next-generation package technology in the HPC and mobile market, the Company has established an AdVanced Package (AVP) business team within the Device Solution Division to expand the advanced package business and bolster synergies between business units.

Mobile Display saw Solid Earnings; To Focus on OLED and QD-OLED in 2023

SDC posted KRW 9.31 trillion in consolidated revenue and KRW 1.82 trillion in operating profit for the fourth quarter.

The mobile display business achieved solid results by focusing on high-end smartphone products despite market demand continuing to contract. For the large display business, its losses lessened in the fourth quarter thanks to increased sales of TVs during the end-year peak season. In addition, the Company exhausted its LCD inventory, completing the switch to a full-fledged QD-OLED centered business.

Looking ahead to the first quarter, Samsung expects smartphone demand to decline year-on-year due to the economic slowdown in major regions. The Company will strive to maintain its solid earnings for the mobile display business by actively responding to launches of flagship products by major customers.

In the large display business, Samsung will secure additional demand and promote an early ramp-up with the introduction of a new lineup of ultra-large TVs and large-size monitors.

In 2023, the business environment is expected to remain challenging due to unstable market conditions and intensifying competition. For the mobile display business, the Company plans to strengthen its market dominance with technological superiority in the relatively solid high-end smartphone market. In addition, Samsung will capitalize on the accelerated transition to OLED by leveraging its cost competitiveness, which is the result of its preemptive investments.

In the large display business, the Company will continue to improve profitability by solidifying its sales base in the premium market, backed by stable yields.

MX to Expand Flagship Product Sales amid Persistent Macro Uncertainties

The MX and Networks businesses posted KRW 26.90 trillion in consolidated revenue and KRW 1.70 trillion in operating profit for the fourth quarter.

Market demand for smartphones remained weak in the fourth quarter, with the mass market contracting sharply due to continued inflation and geopolitical instability. The MX Business reported a decline in both sales and profit quarter-on-quarter, due to fading new-product effects of flagship models and a drop in smartphone sales on weak demand from the economic slowdown. The impact of the decline in sales of mass-market smartphones was greater than previously expected, while flagship sales held up well relative to market projections.

In the first quarter, a sequential decrease in market demand is expected across all smartphone segments, amid continuous macroeconomic uncertainties. The Company plans to expand flagship product sales with the successful launch of its new Galaxy S23 series, equipped with an enhanced camera and gaming functionalities, among others. Samsung will also continue to enhance its Galaxy ecosystem products, consisting of PCs, tablets and wearables, while maintaining its focus on effective resource management for solid profitability.

In 2023, the Company expects smartphone market demand to contract due to persistent macroeconomic conditions. Mass-market models are expected to be impacted the most, while consumer demand for premium smartphones and tablets is projected to stay relatively solid.

The MX Business plans to achieve strong sales and solid profitability by strengthening the competitiveness of its premium flagship products. For the mass-market segment, the Company plans to collaborate with mobile carriers on various sales programs, including those aimed at expanding the 5G smartphone user base. It also plans to improve the premium product experience for its tablets and wearables, through upgraded product features and multi-device experiences.

Visual Display to Continue Focus on Premium and Lifestyle Products

The Visual Display and Digital Appliances businesses recorded KRW 15.58 trillion in consolidated revenue and KRW 0.06 trillion in operating loss for the fourth quarter.

Market demand for TVs increased quarter-on-quarter on the back of year-end seasonality but contracted year-on-year due to the global economic slowdown. The Visual Display Business posted higher results than the previous quarter by meeting regional, peak-season demand and expanding sales of high-value-added products, including Neo QLED and Lifestyle models. However, results declined from a year earlier due to weaker consumer sentiment from rising interest rates and inflation.

Looking ahead to the first quarter, market demand is expected to decline both quarter-on-quarter and year-on-year because of seasonality and the ongoing impact of the global economic downturn. Samsung will focus on capturing demand for premium products, including our 2023 Neo QLED, and strengthen partnerships with major channel partners. The Company will also aim to secure profitability by optimizing operations and manage costs.

In 2023, overall TV demand is expected to remain stagnant as market uncertainties are projected to persist. Based on the demand for premium products, Samsung will focus on the ultra-large-screen market with 98″ Neo QLED and continue innovations in premium products by releasing MicroLED models in various sizes as well as providing more options for OLED TVs and gaming monitors.

The Company posted consolidated revenue of KRW 77.2 trillion, a record for the second-quarter, and operating profit of KRW 14.1 trillion, a 12% increase from a year earlier. The DS (Device Solutions) Division reported a historical high in quarterly revenue for the second consecutive quarter while the DX (Device eXperience) Division posted a significant year-on-year revenue growth.

Earnings in the Memory Business improved both year-on-year and quarter-on-quarter as the Company focused on meeting solid demand for servers under the disciplined sales strategy to meet market demand, helping to maintain average selling prices. The system semiconductor businesses (System LSI and Foundry Businesses combined) achieved a record high quarterly profit as System LSI expanded its product lineup while Foundry hit the Company’s targeted yield trajectory for advanced nodes as it increased supply to global customers.

SDC (Samsung Display Corporation) saw record second-quarter revenue and operating profit for mobile displays driven by solid demand from major customers. Performance in the large panel business was weaker due to initial ramp-up costs of quantum-dot (QD) displays and a decline in LCD prices.

The MX (Mobile eXperience) Business posted a sequential decline in earnings as material and logistics costs rose, but revenue increased from a year earlier driven by sales of premium models. The Networks Business saw an increase in revenue from the previous quarter and added DISH Network as a customer.

Earnings in the Visual Display Business declined due to weak global TV demand while the Digital Appliances Business posted a record high quarterly revenue for the second straight quarter as sales of Bespoke products expanded globally.

The strength in the US dollar against the Korean won benefited the Company’s component businesses, resulting in an approximately 1.3 trillion won company-wide gain in operating profit compared to the previous quarter.

In the second half, with macroeconomic uncertainties expected to persist, the DS Division will focus on managing a portfolio of high-value-added products and expanding advanced nodes and new applications. The DX Division will continue to reinforce leadership and product lineup in the premium segment.

In the Memory Business, server demand is expected to remain solid while PC and mobile demand is likely to see continued weakness. The Company will closely monitor the demand impact from various factors, such as new mobile product launches and focus on high-value-added and high-density product portfolio management.

The System LSI Business plans to expand the SoC business and strengthen the leadership position in image sensors. For the Foundry Business, the Company aims to exceed market growth by adding new global clients while continuing to reinforce technological competitiveness through the development of the 2nd generation GAA process.

For SDC, earnings in the mobile panel business is expected to increase, driven by new smartphone launches and expansion into new application areas such as automotive and gaming. Earnings in the large display business is expected to improve as demand increases for QD displays.

The MX Business expects to post solid profitability with foldable products becoming mainstream as the Company targets foldable sales to surpass that of the Galaxy Note series. For the Networks Business, the Company plans to maintain momentum in revenue growth by expanding overseas businesses.

In the Visual Display Business, the Company will capture demand in the premium segment by boosting sales of strategic products, such as Neo QLED, Super Big and Lifestyle TVs. The Digital Appliances Business will focus on improving profitability by increasing sales of premium products.

The Company’s capital expenditures in the second quarter was KRW 12.3 trillion, including KRW 10.9 trillion spent in the DS Division and KRW 0.8 trillion in SDC. Similar to the first quarter, spending on memory was concentrated on infrastructure at P3 and on process migrations at fabs in Hwaseong, Pyeongtaek and Xi’an. Investments in the Foundry Business focused on increasing production capacity of under 5-nanometer advanced processes.

Semiconductor Quarterly Revenue All-time High

The DS Division posted KRW 28.5 trillion in consolidated revenue and KRW 9.98 trillion in operating profit in the second quarter.

The Memory Business’s performance improved both year-on-year and quarter-on-quarter as ASP stayed at a better-than-expected level thanks to the disciplined sales strategy to meet market demand and the benefits of a strong dollar. Although server demand remained solid, demand for consumer products such as mobile weakened due to widening impacts of macro issues, resulting in DRAM and NAND shipments to come in below bit growth guidance.

For DRAM, the Company achieved the highest sales of server products in the industry for any quarter by optimizing its portfolio and actively responding to solid demand centering on servers but missed guidance for total bit growth due to weak demand for consumer products such as PCs and mobile devices.

As for NAND, Samsung continued to expand the proportion of high-density products of 512Gb and higher for server SSD and actively responded to the high-density trend in client SSD and mobile to maintain a favorable ASP. But the overall bit growth came in below guidance as mobile demand was much weaker than expected.

Looking to the second half of the year, fundamental demand for server will stay solid as the investments in core infrastructure and new growth areas such as AI and 5G are expected to keep expanding, centering on major datacenter companies. Customers may possibly adjust inventory level temporarily amid some IC components supply problems as well as a concern over widespread economic recession and geopolitical issues.

Demand for consumer products like PC and mobile is likely to stay weak. For PC, there is a possibility that the slump in demand may expand to enterprise segments. Nevertheless, there are also chances of consumer demand getting stimulated during the year-end promotional season.

Amid the highly volatile market situation, the Company plans to maintain its stance of operating an optimized portfolio that centers on high-density and high-value-added solutions, based on supply flexibility in accordance with market conditions and customer needs.

For DRAM, Samsung will keep staying disciplined against excessive sales expansion and flexibly managing supply in line with demand.

For NAND, the Company will focus on creating demand mainly for high-density products while considering characteristics of high price elasticity and will continue to strengthen its market leadership by actively responding to demand based on its excellent cost competitiveness.

The System LSI Business saw its earnings improve quarter-on-quarter due to a growing supply of DDIs, volume-zone SoCs and positive effects of foreign exchange movements. Samsung further solidified its leadership in image sensor through the world’s first supply of 200-Mega pixel sensors and secured US customers in addition to Europe in automotive SoC business.

In the second half, the Company aims to exceed revenue and profitability growth by expanding its lineup of 5G SoCs and expand its customer base to maximize supply of its 200M pixel image sensors.

The Foundry Business achieved its highest ever second quarter revenue thanks to yield improvement, solid demand for advanced processes centering on HPC and stable demand in matured processes from various applications. It also achieved its highest second quarter profit. In addition, it has strengthened technological competitiveness through the world’s first mass production of the 3-nanometer GAA process, accomplished in June.

In the second half, the Company maintains its view that HPC and 5G-related demand will remain solid despite uncertainties related to geopolitical issues and inflation. Through close cooperation with customers, Samsung aims to exceed market growth through yield improvement of advanced processes alongside a proper pricing strategy.

In addition, the Company plans to advance the completion of second-gen GAA process development and expand customer base for large-scale orders. In October, offline forums will take place in US, Europe, Japan and Korea to further strengthen customer networking.

SDC Earnings To Improve With New Product Launches in 2H

SDC posted KRW 7.71 trillion in consolidated revenue and KRW 1.06 trillion in operating profit for the second quarter.

Mobile display earnings improved from a year earlier despite a slowdown in smartphone demand, led by strong sales for flagship smartphone models and positive effects of foreign exchange movements. Growing adoption of OLED displays in laptops and gaming devices also contributed to the results.

For large displays, a decline in LCD ASP and initial costs of QD display development caused continued loss. However, Samsung expects sales and profit margin to increase in earnest from the second half of 2022, driven by rapid improvements in the QD display yield and a rising number of brands adopting QD display products.

Looking ahead to the second half of this year, for the smartphone market, the Company forecasts earnings to grow compared to 1H as new products are due to be released by major customers. However, earnings are likely to be more volatile than last year due to a number of difficult-to-predict external factors. Samsung expects sales of its OLED panels to continue to expand, given the high proportion of premium lineup, which is relatively unaffected by economic fluctuations.

For laptops, although the market is expected to shrink, the Company forecasts sales volume of its OLED displays to keep growing, led by strong consumer preference for displays featuring high resolution and a fast response time.

For large displays, new TVs and monitors equipped with QD display are scheduled to roll out globally. Samsung will actively promote the excellence of QD displays to consumers through joint promotions with its customers, aiming to lead the premium market.

Mobile Business To Focus on Flagship Sales and Multi-Device Experiences in 2H

The MX and Networks businesses posted KRW 29.34 trillion in consolidated revenue and KRW 2.62 trillion in operating profit for the second quarter.

Overall market demand declined from the previous quarter amid geopolitical issues and concerns over inflation on top of continued weak seasonality. Profitability decreased from the previous quarter at some degree due to rising costs of components and logistics as well as negative effects of foreign exchange movements.

However, supply disruptions in the first quarter were mostly resolved in the second quarter and Samsung secured its revenue growth year-on-year with solid sales of flagship models such as Galaxy S22 series and Galaxy Tab S8 series.

For the second half, smartphone market demand is forecast to stay similar year-on-year or show single-digit growth with prolonged geopolitical issues and economic uncertainties. However, the Company aims to expand flagship sales by successfully launching new foldable models, driving the mainstreaming of the foldable products as a key category in the premium segment with better customer experiences through collaboration with global partners.

While the global smartwatch market is likely affected by economic uncertainties in the short term, Samsung will continue to maintain high growth momentum with the release of new watch models, expanding Galaxy Ecosystem devices.

Moreover, the Company plans to provide a richer, multi-device experience based on SmartThings by introducing various everyday scenarios customized to individual life patterns. Although market uncertainties are forecast to persist for some time, the Company will strive to maintain double-digit profitability by improving its product mix centered on flagship products through mainstreaming foldable lineup and by continually enhancing operational efficiency.

Strong Focus on Premium Products Amid Continued Macro Uncertainties

The Visual Display and Digital Appliances businesses posted KRW 14.83 trillion in consolidated revenue and KRW 0.36 trillion in operating profit in the second quarter.

In the second quarter, market demand for TVs decreased both quarter-on-quarter and year-on-year, the former due to weak seasonality and the latter due to the previous year’s high baseline buoyed by pent-up demand. Consumer demand was also affected by macroeconomic factors such as inflation and high interest rates, resulting in lower quarterly revenue and profit for the Company.

However, Samsung was able to maintain its premium leadership in the market with expanded sales of strategic products, including Neo QLED and Lifestyle TVs.

In the second half, while opportunities such as peak seasonality and global sporting events are expected, macro risks are also expected to continue, casting uncertainties on overall market demand.

Samsung will closely monitor rapidly changing market conditions and achieve solid profitability by further expanding strategic product sales. It will also work with its channel partners through strategic partnerships and actively target the Signage market where B2B demand has been recently revived. The Company will also focus on solidifying its market leadership with innovative products such as Micro LED and Odyssey Ark.