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Samsung expected to report 80% profit plunge as losses mount at chip business

178 points by cebert 3y ago

fomine3 3y ago
The worst situation player in this market is Kioxia. They only make NAND chips unlike Micron with DRAM or Korean conglomerates.
deleted 3y ago
[deleted]
CoastalCoder 3y ago
> Analysts see its semiconductor business — typically Samsung’s cash cow — reporting a more than 3 trillion won ($2.2 trillion) loss for the third quarter Is this some kind of reporting error, or is that number accurate?
- SushiHippie 3y ago
  "Correction: The key points of this article have been updated to reflect that 3 trillion won is equivalent to $2.2 billion." from TFA
- deleted 3y ago
  [deleted]
- padjo 3y ago
  The dollar conversion looks wrong for sure
- twarge 3y ago
  It should be $2.2 billion.
- vegabook 3y ago
  1USD = 1349KRW
- barelyauser 3y ago
  No offense but, how the hell could it be accurate?
  - CoastalCoder 3y ago
    It seemed high, but (a) CNBC has a decent reputation for financial reporting, and (b) I know Samsung is big but I didn't know exactly how big, and (c) I hadn't had coffee yet.
thiago_fm 3y ago
Semiconductor in general is going bust, too much supply. All semiconductors companies invested more because of Covid (and the sudden huge demand). Only CUDA/Nvidia managed to build something profitable with it, a competitive advantage that could also go down the drain once more investment is put into CUDA alternatives. And this is counting on AI hype to continue (likely, but maybe demand for hardware might eventually stabilise). Even though semiconductors is a highly specialized industry, it's a CAPEX heavy business, you need both fabs and research and you also have too many players in the market. People talk a lot about TSMC and the bleeding edge business(computers, phones), but that's just one part of it, but there's a whole industry of embarked software that will likely be much bigger. I don't doubt that the sector will grow(in revenues), but I doubt they'll be able to produce a profit as high as some companies in the tech sector like advertising etc, that are much more asset-light. I really fail to see what people see even in Nvidia/Cuda, it won't take long until others catch up, and they'll likely move back to margins closer to the industry, which are extremely low. There's even more money to be made in sectors like energy drinks.
- throwoaaoekae 3y ago
  [dead]
- ckastner 3y ago
  > Semiconductor in general is going bust, too much supply. All semiconductors companies invested more because of Covid (and the sudden huge demand). Semiconductors are cyclical in general, and most sources that I trust believe that the bottom is already behind us. Many of the big players have already begun guiding revenue growth again, though not as massive as Nvidia's windwall, obviously.
  - MayeulC 3y ago
    I think I've really picked the worst time to finish my PhD thesis and go on the semiconductor job market... Though I think it will delay me by a few months at worst.
    - 3y ago
throwoaaoekae 3y ago
[dead]
mikeryan 3y ago
What a sensational way to write this headline. Focusing on profits vs the 11% decline in revenues which is a more salient number.
- hospitalJail 3y ago
  Profit is more important than revenue.
  - mikeryan 3y ago
    No. It’s not. The only time that’s true is if your revenues are flat year over year.
    - barelyauser 3y ago
      >> "The only time that’s true is if your revenues are flat year over year." That also makes a lot of assumptions on its own. Baseline is: profits matter. Capitalists want their cut. Profits is the extraction of the "thing". If capitalists can't put the "thing" in their pockets then why even bother?
      - Jorge1o1 3y ago
        If you're an investor in a company, theoretically you can think of the company as a stream of future dividend payments (cash flows) discounted over time. So maybe the company has $100 in profit in 2024, and they have 5 shares, and they pay out all of their profit as $20 dividend per share. And in 2025 you expect them to make $200 in profit, with the same 5 shares, which is $40 per share. Although that's a theoretical model, and there's many companies that don't pay dividends at all and still command mighty stock prices (e.g. TSLA) this is how real companies are actually valued -- on the expectation of future cash flows, maybe times some multiple. The reason why revenue is more important than profits for the vast majority of technology / growth-stage companies is that most of these companies are focused on creating double-digit percent revenue growth every single year. Their profits will be 0 or negative because all of the money that they make from selling widgets is getting spent on marketing or hiring new engineers to build more widgets, or building a factory. But after 5-10 years, this company will have "scaled over" its fixed expenses like rent, they will have huge revenues, they'll have serious market share, and then you can simply slow down / turn off the marketing and other SG&A expenses, and then suddenly you go from being a 0 or negative profit company to a multi-billion $ profit company. But if you're too focused on clipping coupons and scrounging pennies as a startup founder, you aren't focused on the right aspect: revenue growth.
simne 3y ago
I remember old article, on HBR, said, semiconductor fabs are now underloaded (predicted about 70% load), so very much sense to create fabless manufacturer. Looks like, AMD was right, to separate fabs and become fabless, and SEC for some reason cannot do it and suffer losses.

178 points by cebert 3y ago

The worst situation player in this market is Kioxia. They only make NAND chips unlike Micron with DRAM or Korean conglomerates.

deleted 3y ago

[deleted]

CoastalCoder 3y ago

> Analysts see its semiconductor business — typically Samsung’s cash cow — reporting a more than 3 trillion won ($2.2 trillion) loss for the third quarter Is this some kind of reporting error, or is that number accurate?

SushiHippie 3y ago
"Correction: The key points of this article have been updated to reflect that 3 trillion won is equivalent to $2.2 billion." from TFA
deleted 3y ago
[deleted]
padjo 3y ago
The dollar conversion looks wrong for sure
twarge 3y ago
It should be $2.2 billion.
vegabook 3y ago
1USD = 1349KRW
barelyauser 3y ago
No offense but, how the hell could it be accurate?
- CoastalCoder 3y ago
  It seemed high, but (a) CNBC has a decent reputation for financial reporting, and (b) I know Samsung is big but I didn't know exactly how big, and (c) I hadn't had coffee yet.

thiago_fm 3y ago

Semiconductor in general is going bust, too much supply. All semiconductors companies invested more because of Covid (and the sudden huge demand). Only CUDA/Nvidia managed to build something profitable with it, a competitive advantage that could also go down the drain once more investment is put into CUDA alternatives. And this is counting on AI hype to continue (likely, but maybe demand for hardware might eventually stabilise). Even though semiconductors is a highly specialized industry, it's a CAPEX heavy business, you need both fabs and research and you also have too many players in the market. People talk a lot about TSMC and the bleeding edge business(computers, phones), but that's just one part of it, but there's a whole industry of embarked software that will likely be much bigger. I don't doubt that the sector will grow(in revenues), but I doubt they'll be able to produce a profit as high as some companies in the tech sector like advertising etc, that are much more asset-light. I really fail to see what people see even in Nvidia/Cuda, it won't take long until others catch up, and they'll likely move back to margins closer to the industry, which are extremely low. There's even more money to be made in sectors like energy drinks.

throwoaaoekae 3y ago
[dead]
ckastner 3y ago
> Semiconductor in general is going bust, too much supply. All semiconductors companies invested more because of Covid (and the sudden huge demand). Semiconductors are cyclical in general, and most sources that I trust believe that the bottom is already behind us. Many of the big players have already begun guiding revenue growth again, though not as massive as Nvidia's windwall, obviously.
- MayeulC 3y ago
  I think I've really picked the worst time to finish my PhD thesis and go on the semiconductor job market... Though I think it will delay me by a few months at worst.
  - 3y ago

throwoaaoekae 3y ago

[dead]

mikeryan 3y ago

What a sensational way to write this headline. Focusing on profits vs the 11% decline in revenues which is a more salient number.

hospitalJail 3y ago
Profit is more important than revenue.
- mikeryan 3y ago
  No. It’s not. The only time that’s true is if your revenues are flat year over year.
  - barelyauser 3y ago
    >> "The only time that’s true is if your revenues are flat year over year." That also makes a lot of assumptions on its own. Baseline is: profits matter. Capitalists want their cut. Profits is the extraction of the "thing". If capitalists can't put the "thing" in their pockets then why even bother?
    - Jorge1o1 3y ago
      If you're an investor in a company, theoretically you can think of the company as a stream of future dividend payments (cash flows) discounted over time. So maybe the company has $100 in profit in 2024, and they have 5 shares, and they pay out all of their profit as $20 dividend per share. And in 2025 you expect them to make $200 in profit, with the same 5 shares, which is $40 per share. Although that's a theoretical model, and there's many companies that don't pay dividends at all and still command mighty stock prices (e.g. TSLA) this is how real companies are actually valued -- on the expectation of future cash flows, maybe times some multiple. The reason why revenue is more important than profits for the vast majority of technology / growth-stage companies is that most of these companies are focused on creating double-digit percent revenue growth every single year. Their profits will be 0 or negative because all of the money that they make from selling widgets is getting spent on marketing or hiring new engineers to build more widgets, or building a factory. But after 5-10 years, this company will have "scaled over" its fixed expenses like rent, they will have huge revenues, they'll have serious market share, and then you can simply slow down / turn off the marketing and other SG&A expenses, and then suddenly you go from being a 0 or negative profit company to a multi-billion $ profit company. But if you're too focused on clipping coupons and scrounging pennies as a startup founder, you aren't focused on the right aspect: revenue growth.

simne 3y ago

I remember old article, on HBR, said, semiconductor fabs are now underloaded (predicted about 70% load), so very much sense to create fabless manufacturer. Looks like, AMD was right, to separate fabs and become fabless, and SEC for some reason cannot do it and suffer losses.