We were expecting a bit of a mess, Samsung has struggled for a few quarters due to a slump in the semiconductor chip market and we were warned the numbers were dire.

The company’s revenue was $47.21 billion during the second quarter of 2023, a six per cent decline from the first quarter. Samsung’s operating profit during the quarter was $524 million which was the 95 per cent drop were were warned about.

While most of this drop in profit is due to weak semiconductor chip sales (DRAM and NAND storage), some is also attributed to weaker smartphone sales.

On the plus side, the company revealed that the revenue from Samsung DS (Device Solutions) business improved slightly compared to the previous quarter, and it posted a narrower loss. Revenue from its Samsung Display (display panel manufacturing arm) and Samsung DX (TV and home appliances) divisions improved, too.

Samsung sang that its semiconductor chip business is expected to improve in the second half of 2023

Samsung DS business consists of three parts: Samsung Foundry, Samsung Memory, and System LSI. Samsung Foundry makes semiconductor chips for other firms, while Samsung Memory designs DRAM, HBM, and NAND chips. System LSI designs camera sensors, Exynos processors, and other fragments.

Samsung Foundry will continue to invest in chip manufacturing technologies to continue its advancements. It plans to enhance the completeness of its 3nm GAA chip manufacturing process and improve research and development and chip packaging technologies.

Chips made by this process will start to show up sometime next year. It also said the production of 3nm chips is proceeding smoothly, and the production of second-generation 3nm (GAP) and 2nm (GAA) chips is on track. The foundry business saw its revenue increase slightly thanks to orders from US-based firms, but the company didn’t reveal the name of its clients.

Thanks to a boom in generative AI services like ChatGPT, sales of DDR5 DRAM and HBM (High Bandwidth Memory) used in cloud servers increased. This led to the improved business of Samsung’s memory chip division compared to the previous quarter. It will continue to focus on sales of high-margin products like DDR5, DDR5X, and HBM.

The company’s system semiconductors, developed by the System LSI division, decreased due to weaker demand from major clients (like Samsung MX, which makes smartphones). However, it also won a chip contract from an automotive firm (likely Hyundai), and it is actively in talks with European car firms for its automotive chips. It has also expanded its business into security cards with fingerprint authentication and battery management services (power ICs).

Samsung Display’s smartphone OLED panels sold well and its business was similar to the previous quarter.

This division expects its business to improve in the coming quarters as its major clients (Apple and Samsung) will launch their premium mobile devices in the second half of this year.

These expected products include the iPhone 15 series, Galaxy Z Flip 5, Galaxy Z Fold 5, Galaxy Watch 6 series, and the Galaxy Tab S9 series. Even sales of its QD-OLED panels are expected to improve as customers buy more high-end TVs during the holiday season.

Samsung’s smartphone division (Samsung MX) expected good business in the coming months as it announced several new high-end mobile products, including Galaxy Z Flip 5, Galaxy Z Fold 5, Galaxy Watch 6, Galaxy Watch 6 Classic, Galaxy Tab S9, Galaxy Tab S9+, and Galaxy Tab S9 Ultra during the Galaxy Unpacked event last night.

Samsung Networks had a disappointing quarter as sales in Japan and North America declined. This comes after business improvements over the past few years as network providers worldwide increased their investments in rolling out 5G networks. However, it plans to improve revenue by selling more 5G core chips and software-based vRAN (virtualised Radio Access Networks).

Samsung sang  that its semiconductor chip sales to improve in the year’s second half. Its OLED and QD-OLED panel sales will also improve before the holiday season, as will the sales of premium appliances and TVs. Its smartphone sales will also improve during the holiday season before the end of this year. So, overall, things will improve as we approach the end of 2023, and growth is expected to happen in 2024.