Samsung had a bad year due to the global economic downturn and fall in demand for semiconductor chips. The South Korean firm's semiconductor chip business is its cash cow, and it had a loss for the first time in its history. Had it not been for the good performance of its smartphone division, Samsung Electronics could have posted a loss in Q3 2023. It now looks like the bad times are over for Samsung, as chip production by South Korean firms jumped last month.
Samsung could post higher profits for Q4 2023 as chip demand has improved
According to a report from Bloomberg, South Korea's semiconductor industry showed the largest gain in years in terms of production and shipments. Chip production reportedly jumped 42% in November, which is the highest growth since 2017. Chip shipments soared a whopping 80%, which is the biggest rise since 2002, according to data released by South Korea's National Statistical Office. These numbers reveal that the country's most important industry is coming back to its usual self after more than a year of challenging times. These are great signs for South Korea's two biggest chip makers: Samsung Semiconductor and SK Hynix.
It also points to a recovery in the global demand for semiconductor chips. South Korea's industrial output improved by 5.3% in November 2023 compared to last year, driven by growth from semiconductor chip firms. The demand for high-performance semiconductor chips has been higher thanks to a boom in the AI and Generative AI fields. As inventory is declining, memory chip prices are increasing, which is a good sign for Samsung.
The South Korean firm is still not out of the woods yet. Some experts believe that global economic growth could slow down next year as China continues its efforts to improve in-house chip technologies and production. US consumers are also feeling the pain of rising inflation and higher interest rates.