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Samsung’s Q4 Profit Misses Expectations as Chip Issues and Rising Costs Weigh on Earnings

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Samsung Electronics has reported a significant shortfall in its preliminary fourth-quarter operating profit, primarily due to challenges in its semiconductor business. The South Korean tech giant estimates an operating profit of 6.5 trillion won ($4.5 billion) for the three months ending Dec. 31, well below analyst expectations of 7.7 trillion won. Although the expected profit represents a 131% year-on-year increase, it marks a 29% decline compared to the previous quarter.

The company’s earnings were affected by rising research and development (R&D) costs and the ramp-up of manufacturing capacity for advanced semiconductors. Additionally, weak demand for conventional memory chips used in PCs and mobile phones further contributed to the dip in profits.

Samsung’s efforts to provide high-end chips to Nvidia have also posed challenges. Unlike its rival SK Hynix, which is Nvidia’s main supplier of high-bandwidth memory (HBM) chips used in AI GPUs, Samsung has struggled to meet the tech giant’s chip requirements. Nvidia’s CEO, Jensen Huang, mentioned that Samsung needs to “engineer a new design” to supply HBM chips, although he expressed confidence in Samsung’s ability to meet this challenge.

The disappointing earnings also extended to Samsung’s logic chip division, which designs and manufactures chips for mobile phones. Analysts estimate losses could have widened to about $1.5 billion in the fourth quarter due to lower production yields and reduced demand for mobile devices, including Samsung’s premium foldable phones.

Despite the weak earnings, Samsung’s shares saw a slight uptick, with analysts noting that the company’s woes were already factored into stock prices. Competition in the chip and mobile sectors remains intense, and analysts are cautiously optimistic that chip demand may have bottomed out.

 

Sony Raises Sales Guidance, Quarterly Profit Surpasses Expectations on Gaming Strength

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Sony raised its sales forecast for the fiscal year on Thursday after posting strong quarterly results, particularly driven by its gaming division. The Japanese tech giant exceeded analyst expectations for operating profit in the September quarter, with a 73% year-over-year increase.

For the quarter, Sony reported:

  • Revenue: ¥2.97 trillion ($19.4 billion), a 9% increase compared to last year but slightly below the expected ¥3.03 trillion.
  • Operating Profit: ¥445.1 billion ($2.91 billion), a 73% jump from the previous year, exceeding the expected ¥336.07 billion.

As a result, Sony raised its fiscal year 2025 revenue target to ¥12.7 trillion from the previous ¥12.6 trillion. The company maintained its operating profit forecast of ¥1.3 trillion, in line with earlier expectations.

Sony’s gaming and network services division, home to the PlayStation brand, was a key contributor to the positive results. The division’s revenue reached ¥1 trillion, up 11% from the previous year, buoyed by digital game sales and the PlayStation Plus subscription service. Despite a weak console market, which impacted hardware shipments, Sony’s software sales saw significant growth. The company sold 3.8 million PlayStation 5 units in the quarter, a 22% decline from the previous year, but game software sales rose by 28% to ¥612.3 billion.

One highlight in the gaming sector was the success of Astro Bot, which sold 1.5 million units in its first two months. Additionally, Sony recently launched the PlayStation 5 Pro, promising upgraded graphics and artificial intelligence features, sparking optimism for a resurgence in hardware sales, especially with the upcoming release of Grand Theft Auto VI.

 

Novo Nordisk Shares Dip Amid Earnings Miss and Reduced Profit Outlook

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Novo Nordisk experienced a dip in its share price after posting weaker-than-expected net profit for the second quarter and revising its operating profit outlook downwards. The pharmaceutical giant reported a net profit of 20.05 billion Danish kroner ($2.93 billion) for the quarter ending in June, falling short of the 20.9 billion Danish kroner projected by LSEG analysts. Additionally, the company’s EBIT (earnings before interest and tax) was 25.93 billion Danish kroner, below the forecasted 26.86 billion Danish kroner.

In response to these results, Novo Nordisk adjusted its full-year 2024 operating profit growth expectations to a range of 20% to 28%, down from the previous 22% to 30%. This announcement caused the company’s shares to tumble nearly 7% before recovering slightly, trading down 2.71% by 9:40 a.m. London time.

Despite the disappointing second-quarter earnings, Novo Nordisk raised its sales growth guidance for the full year, expecting growth between 22% and 28% at constant exchange rates, up from the previous estimate of 19% to 27%. This optimism is partly driven by a 55% increase in sales of its popular weight loss drug, Wegovy, which reached 11.66 billion kroner in the second quarter compared to the same period in 2023.

CEO Lars Fruergaard Jørgensen expressed confidence in the company’s future growth, highlighting the potential for “attractive growth” in the coming months. He assured investors of the company’s ability to scale operations and supply patients, emphasizing that adjustments to rebates were a factor in the second-quarter results. Jørgensen remains positive about the long-term competitiveness of Novo Nordisk, even in the face of increasing competition from companies like Roche, which recently reported promising early-stage trial data for its obesity drug candidate.

Moreover, Novo Nordisk’s Wegovy has recently achieved significant milestones. The drug was approved for sale in China, the world’s second-largest economy, and received backing from medical regulators in the U.K. and European Union for reducing risks of serious heart events among overweight and obese adults.