Samsung posted worse-than-expected numbers in its latest quarter as chip sales remained subdued though analysts expect a significant rebound this year.
The Korean mobile phone and electricals group reported that operating profits fell by a third (35%) in the October to December quarter to 2.8 trillion won (US$2.1 billion) on sales of 68 trillion won, down by 5%.
Semiconductor prices have slumped due to massive oversupply as demand for electrical devices was hit by the global economic downturn.
Prices though have started to recover recently and losses in the semiconductor arm reduced in the latest quarter offset by weakness in TVs and home appliances.
Mobile phone earnings also fell slightly in the quarter just ended.
Manufacturers have cut back on production to reduce supplies, which has helped prices, but analysts see a surge in demand for artificial intelligence (AI) chips as the main recovery driver.
“The [semiconductor] industry cycle is stabilising faster than expected thanks to supply adjustments,” Roko Kim, an analyst at Hana Financial Investment told the FT.
Samsung itself will be the first mobile phone maker to incorporate AI into a handset when it launches its next generation of smartphones later this month.
Samsung releases its full quarterly and annual results on 31 January.