Samsung Electronics Reports Drop in Operating Profit Amid Ramping Up R&D Spending
Samsung Electronics reported a sharp drop in its operating profit for the fourth quarter, as the company ramps up research and development spending to secure future technology leadership. Despite beating expectations on revenue, the company’s operating profit missed forecasts.
Revenue for the quarter came in at 75.8 trillion Korean won ($52.2 billion), a 12% increase from last year, while operating profit grew 130% year on year to 6.5 trillion won. However, operating profit fell 30% and revenue slipped 4% from the previous quarter due to soft market conditions and increased company expenditures.
The company’s chip business posted an operating profit of 2.9 trillion won, down 25% from the previous quarter, despite a record-high fourth-quarter revenue of 30.1 trillion won driven by demand for its advanced memory products used for AI applications. Samsung’s memory business is cutting down legacy products to better align with market demand and increasing its proportion of high-value-added products, such as high-bandwidth memory.
The company’s smartphone business saw a quarter-over-quarter decrease in sales and profit, due in part to the fading effects of new flagship smartphone model launches. However, Samsung plans to drive sales growth with new flagship models, particularly its newly launched Galaxy S25 series, and will continue to push into the AI smartphone market.
For the full year, Samsung reported revenue of 300.9 trillion won and operating profit of 32.7 trillion won. 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 in 2025.