**Samsung Q4 2023 Earnings**

January 31, 2023

Samsung is the market leader in both DRAM and NAND and their memory divisions are just part of a massive conglomerate. I look through their earnings presentation and conference call transcripts for insight into the state of the memory market. This is not an analysis of their earnings, prospects, etc.

Earnings Presentation

  • · Demand “appears to have recovered with the normalization of inventories at customers.” Price increases recently have likely spurred demand for customers to build some inventory.
  • · Inventory normalization “accelerated” during the quarter for both DRAM and NAND. The DRAM business returned to profitability. The company did not state if this means gross profit or operating profit. I think it is the latter, given where Hynix’s results came in.
  • · For the first quarter, demand in PC and mobile is expected to continue its recovery. The server market is showing signs of demand recovery also.
  • · Memory business recovery is expected to continue for the full year 2024. As is typical for Samsung, the company gives broad statements that offer little insight into their views on supply/demand balance, pricing trends, and other relevant information. Their comments are focused on products and tech nodes.

Earnings Call

These are the highlight quotes regarding DRAM and NAND:

  • · Comments on capital expenditures in memory said that spending went to infrastructure first and technology node progression second. They also called out investment in capital expenditures on HBM and DDR5 capacity.
  • · The memory market is expected to continue to recover in 2024.
  • · Mobile industry demand has recovered recently.
  • · Inventory levels at server customers have reached normal levels.
  • · Bit growth at Samsung was at market levels in the quarter.
  • · The overall memory business at Samsung is expected to return to profitability in the first quarter.
  • · The memory executive on the call twice commented that their investments will be focused on profitability. This is good for memory investors as they are signaling that Samsung will bias their capex away from growing bit supply quickly. All three major memory players have now made similar comments. Taking them at their word, this means the risk of oversupply in the near term is low.
  • · In Q4, Samsung’s DRAM bit growth was in the mid-30% range. ASPs increased by very low double digits %. Q1 bit growth is expected to decline by mid-teens % with Samsung around this level.
  • · In Q4, NAND bit growth was in the mid-30% and ASPs increased by high-single-digit %. For Q1, they expect market bit growth to be low-single-digits % with Samsung’s bit growth slightly below the market.
  • · Memory inventory reductions progressed quickly in the fourth quarter with DRAM levels coming down faster than NAND. In the first half, the company plans to continue their selective fab underutilizations to bring down inventory levels across their portfolio.
  • · DRAM inventories will reach normal levels as they exit Q1. NAND inventories will reach normal levels “at least” by the end of the first half.
  • · For memory, the demand environment is expected to gradually improve in 2024.
  • · Overall memory supply in 2024 is expected to be muted because of lower capital expenditures. Samsung sees capex this year in the industry to be focused on HBM and other AI-related products.
  • · HBM sales were up 40% sequentially in Q4.
  • · The smartphone market is expected to grow in 2024 by mid-single-digit %, as measured by revenue.


Samsung made the comments memory investors were hoping to hear. Specifically, inventory levels are coming down fast with DRAM reaching normal levels by the end of calendar Q1. Inventory levels at server customers have reached normal levels. This was the last segment to normalize. Demand and pricing are expected to steadily improve throughout 2024. Most important of all, the company is focusing capital investments on infrastructure for future growth and in the most advanced technology nodes, including HBM for AI, where demand is furthest ahead of supply. We have seen the first 2024 reports from all four DRAM manufacturers and all indications are that demand will outgrow supply throughout 2024 at least. Micron’s stock price has run up along with the broader market in the last three months, putting it ahead of where I thought it would be at this point in the cycle. However, I do think as the year unfolds it will become clear that the underinvestment of the last two years in memory capacity will lead to significant shortages in the supply of DRAM and NAND, and an associated strong run-up in ASPs. The next read point is Micron’s earnings in late March. I think that release, FQ2-24 for them, will be another beat-and raise. When the memory market turns, it moves faster than anticipated, which is why investors chase the stock up during constrained periods and down during gluts.

-Smooth Hughes (cyclical long MU)