Samsung's chip business is showing signs of recovering as the company turned a profit from its DRAM business for the first time in a year for the fourth quarter of 2023, which has been a tough year for the South Korean tech giant due to the global economic downturn.

The company said on Wednesday that it posted 2.82 trillion won in operating profit and 67.78 trillion won in revenue in the fourth quarter, a drop of 34.4% and 3.8%, respectively, from a year ago.

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For the full year of 2023, Samsung recorded 6.57 trillion won in operating profit and 258.94 trillion won in revenue, a decrease of 84.9% and 14.3%, respectively, from 2022 and its poorest performance in over a decade caused by both low consumer product demand and the downcycle of the chip market.

The tech giant's chip business, traditionally its main profit generator, recorded 14.9 trillion won in operating loss for the whole year. Like its memory chip rivals SK Hynix and Micron, Samsung was hugely impacted by the downturn of the global chip market that started in late 2022 and was forced to reduce its production output of chips from the dip in demand.

However, its chip business narrowed its loss in the fourth quarter with an operating loss of 2.18 trillion won, markedly better than prior quarters in which it recorded operating losses approximately in the 4 trillion won range. Samsung also said it turned a profit from DRAM on the back of higher prices during its latest quarter.

Demand for DRAM in the server sector showed signs of recovery during the fourth quarter as investments in generative AI spread across the IT industry, the South Korean tech giant noted. More chips were also shipped as content-per-box continues to increase for PC and mobile, the company added.

Looking ahead, Samsung said chip demand is expected to gradually recover in 2024 while demand for high-end chips is expected to be especially strong thanks to expanded AI applications across industries.

Meanwhile, the company's mobile business reported 2.73 trillion won in operating profit for the fourth quarter. Samsung said the business unit, called MX Business by the company, maintained its double-digit profitability during the quarter.

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Smartphone market demand is expected to rebound in 2024 from the anticipation of a global economic recovery, especially in the premium segment, the company said.

Samsung will lead the "AI smartphone market" through Galaxy AI on the Galaxy S24 series. The company will also enhance Galaxy AI to optimize it for its foldable devices and ultimately continue to show a double-digit rate of growth in its flagship smartphone shipment, Samsung added.

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