Samsung Display’s Third Quarter is Resilient

Samsung Display (SDC) reported strong third-quarter results, with consolidated revenue hitting KRW 8.22 trillion ($6.1 billion) and operating profit at KRW 1.94 trillion ($1.4 billion). The robust performance was driven by a focus on high-end mobile and large displays, despite macroeconomic headwinds.

The company saw a modest QoQ increase in demand for its mobile display unit, attributed to seasonal demand and new product launches by key smartphone players. SDC’s emphasis on premium OLED technology has paid off amid a widening gap between high-end and mid-tier markets.

For large displays, SDC improved earnings from the prior quarter by concentrating on high-end products and enhancing operational efficiency.

For Q4, SDC projects continued strength in mobile display sales owing to seasonal uplifts in the smartphone and IT sectors. However, inflation and rising interest rates might dampen growth. The company plans to offset this by capitalizing on its high-end market prowess and introducing new foldable products. Despite tepid demand forecasts for large displays due to economic challenges, SDC aims to cut losses by optimizing its product mix.

SDC’s MX and Networks businesses saw Q3 consolidated revenues of KRW 30.00 trillion ($22.2 billion) and operating profits of KRW 3.30 trillion ($2.4 billion). The results were buoyed by a global smartphone market recovery and the launch of flagship models including the Galaxy S23 series.

Q4 is anticipated to witness increased competition in both premium and mass-market segments due to seasonality and geopolitical instability. The MX Business is poised to capitalize on year-end holiday sales with promotional efforts for foldable products and the Galaxy S23 series.

In 2024, with expectations of a smartphone market rebound and growth in premium tablets and smartwatches, the MX Business plans to elevate customer experience and explore areas like XR, Digital Health, and Digital Wallet.

Visual Display and Appliances Seek Profitability Amidst Demand Decline

The Visual Display and Digital Appliances units posted Q3 consolidated revenues of KRW 13.71 trillion ($10.1 billion) and operating profits of KRW 0.38 trillion ($280 million). Market demand for TVs saw a quarter-on-quarter rise but year-on-year decline due to macro factors.

The Visual Display Business improved profitability YoY by focusing on high-value products like Neo QLEDs and Super Big TVs. Despite ongoing uncertainties, the business anticipates solid demand in the premium market for Q4. In 2024, the business unit plans to capitalize on demand related to major sports events and continue innovating in the ultra-high-definition and ultra-large TV segments.

Revenue (KRW trillions)Q3’23Q2’23Q3’22QoQ ChangeYoY Change
Total67.4060.0176.7812% ↑12% ↓
DX44.0240.2147.269% ↑7% ↓
VD/DA13.7114.3914.755% ↓7% ↓
VD7.327.257.861% ↑7% ↓
MX/Networks30.0025.5532.2117% ↑7% ↓
MX29.2524.6130.9219% ↑5% ↓
DS16.4414.7323.0212% ↑29% ↓
Memory10.538.9715.2317% ↑31% ↓
SDC8.226.489.3927% ↑13% ↓
Harman3.803.503.639% ↑5% ↑
Revenue ($ milllions)Q3’23Q2’23Q3’22QoQ ChangeYoY Change
Total49,87644,40756,81712% ↑12% ↓
DX32,57429,75534,9729% ↑7% ↓
VD/DA10,14510,64810,9155% ↓7% ↓
VD5,4165,3655,8161% ↑7% ↓
MX/Networks22,20018,90723,83517% ↑7% ↓
MX21,64518,21122,88019% ↑5% ↓
DS12,16510,90017,03412% ↑29% ↓
Memory7,7926,63711,27017% ↑31% ↓
SDC6,0824,7956,94827% ↑13% ↓
Harman2,8122,5902,6869% ↑5% ↑

Operating Income (KRW trillions)Q3’23 Q2’23 Q3’22
Operating Income ($ billlions)Q3’23Q2’23Q3’22QoQ ChangeYoY Change

The Semiconductor Business

Samsung Electronics’ semiconductor division posted an operating loss of 3.75 trillion won in Q3 2022, improving from a loss of 4.36 trillion won ($3.22 billion) in Q2 as signs emerge of a broader recovery in the memory chip market.

The loss reduction was driven by increased sales of high-value memory products like HBM, DDR5 and UFS as well as price increases. Samsung is seeing more purchase inquiries from customers looking to secure inventory with expectations that memory market conditions have bottomed out following industry-wide production cuts.

Samsung’s memory sales showed bit growth below guidance as the company focused on reducing inventory of legacy nodes rather than chasing volume growth. However, with memory pricing increasing, Samsung was able to reverse some previous inventory valuation losses.

Looking ahead, Samsung expects memory demand to further improve in Q4 amid seasonal tailwinds and recovering IT spending. The company plans to expand sales of automotive products and ramp up production of next-gen interfaces like DDR5.

For 2023, Samsung sees recovery led by high-capacity and AI-focused memory demand. The company will increase supply of advanced nodes like 1a nm DRAM and 128-layer V-NAND where shortages are expected.

In foundry, while Samsung saw utilization drop significantly in Q3, orders grew strongly driven by high-performance computing demand. Samsung remains focused on expanding production and developing new GAA nodes to address long-term growth in segments like AI and automotive.