Samsung's profits are up significantly—but it faces a challenge due to the rising demand for AI chips
And a tougher competitor in the market.
AI is supposed to be a goldmine, and in many ways, it has been for Samsung– demand for its high-performance memory chips hit record highs. But staying ahead in the AI arms race isn’t cheap, and despite an impressive revenue year-on-year growth in Q4, high operating costs meant profits didn’t quite keep pace with revenue growth.
Okay, so, in the last three months of 2024, the South Korean tech giant raked in a whopping 75.8 trillion Korean won in revenue – that's like $52.2 billion. That's a 12% jump from the year before. And get this, its operating profit, which is basically what's left after all the expenses, was 6.5 trillion won (or $4.5 billion). That's over double what it was last year, and way better than anyone thought it would be.
But things weren't quite as rosy when you look at the last quarter specifically. Profits took a hit compared to the previous quarter. Samsung faced a bunch of challenges, including tougher competition (especially from SK Hynix), a weaker market, and higher research and development costs.
A look at its chip business showed that even though the company had record revenue in the fourth quarter (at 30.1 trillion won ($20.8 billion), profits were down (at 2.9 trillion won ($2.0 billion) – less than half of what its smaller competitor, SK Hynix, made.
And the phone business wasn't much help either. Even though the Galaxy S24 did well overall for the year, the mobile division saw both revenue and profit drop in the last quarter, probably because the initial buzz around the new phones died down.
Still, the company finished 2024 strong, raking in a whopping 300.9 trillion won ($207.4 billion) in revenue and 32.7 trillion won ($22.5 billion) in operating profit, making it its second-best year ever.
Samsung's bracing itself for a challenging start to 2025. It anticipates weaker demand for memory chips, slower smartphone sales, and a generally soft IT market, which could make it hard to boost earnings. But one thing's for sure: the company won't just sit back as it hopes that its focus on AI, premium devices, and advanced chip tech, will drive growth down the line.
