Samsung Needs AI to Succeed as It Reports Weakest Earnings in 10 Years
Samsung has experienced some steep declines in profit over the last couple of years and in its recent earnings report, the company has failed to turn that around.
The company experienced a sharp decline in its profits in 2022 and 2023 didn’t see that improve. According to the Wall Street Journal, Samsung posted its weakest annual earnings in more than 10 years as net profit fell 73% in Q4.
Overall, Samsung reported 258.94 trillion won ($194 billion) in annual revenue and 6.57 trillion won ($4.9 billion) in operating profit for 2023. These numbers are a significant drop from the previous year where the Korean giant posted an operating profit of 43.38 trillion won ($35 billion) for 2022, which was already $6.9 billion smaller than the year before, Engadget adds. These are massive losses affecting all of the company’s prominent divisions (semiconductors, televisions, and smartphones), with a particular emphasis on poor profit margins.
Its semiconductor business fell into the loss column for the first time ever, Nikkei reports.
While its semiconductor obviously performed poorly in 2023, there were apparently signs of recovery thanks mainly to global demand driven by artificial intelligence. Its memory chip segment posted losses for the fourth consecutive quarter and while there are signs of recovery (its DRAM business turned profitable in the final quarter of 2023), the numbers look bleak.
Samsung likely needs AI to succeed for two major reasons. Firstly, if AI technologies continue to grow, its semiconductor business can bounce back in support of it. As mentioned, it is one of the few areas that Samsung could point to as a driver of potential future profits.
Secondly, Samsung bet hard on AI with the launch of its new Galaxy S24 smartphones. The phones featured some minor hardware improvements — such as a flat, brighter display and titanium case on the Ultra model — but leaned heavily on AI tasks such as translation, search, and image editing. Samsung needs this segment to grow and become popular if it wants to move more smartphones in 2024, as initial results from these technologies either aren’t unique to Samsung or were unimpressive.
In PetaPixel‘s review of the Galaxy S24 Ultra and a subsequent comparison to the other top devices in North America, Samsung’s handheld fell behind when it came to image quality, editing, and video capture performance. While it is a solid overall device, it did not stand out in any particular metric either.
Samsung needs its bet on AI to succeed or else its business could fall into even greater jeopardy — it’s what the company is pinning its hopes on in its annual report. Smartphone sales have been lagging, and Apple recently took the top spot in global smartphone shipments from the Korean tech giant — a position Samsung had previously held annually since 2010.
Image credits: Jaron Schneider for PetaPixel
