Seoul– Samsung Electronics Co. has said it is expecting a gradual recovery in memory chip demand and shipments of smartphones this year after a 38 per cent drop in its fourth-quarter earnings, aided by improving demand from data centers and smartphone makers, and releases of the latest premium gadgets.

Samsung, the world’s leading memory chip and smartphone manufacturer, posted a net income of 5.23 trillion won ($4.4 billion) in the October-December period, compared with a profit of 8.46 trillion won a year earlier, due to a slump in the memory chip sector, Yonhap news agency reported on Thursday.

Its fourth-quarter operating profit slid 33.7 per cent on-year to 7.16 trillion won in the fourth quarter, but sales rose 1.05 per cent to 59.88 trillion won over the cited period.

The figures were in line with the earnings guidance announced earlier this month.

The tech giant cautiously painted a rosy picture for its chipmaking business this year with a recovery in memory chip demand.

In a conference call, Samsung expected bit growth of more than 10 per cent for DRAM and above 20 per cent for NAND flash.

Bit growth refers to the amount of memory produced and is considered a key barometer for gauging market demand.

“In 2020 on a whole, server demand for DRAM is seen as solid on the back of increased investments by data centers,” the company said. “For mobile, the pace of 5G expansion and its effects should be monitored closely, but the company sees demand picking up around mass-market models as major manufacturers expand their 5G smartphone lineups.”

Samsung also expected double-digit revenue growth in its foundry business on mass production of 8-nanometer computing chips and demand for 5G-related chips.

Revenue from the semiconductor division stood at 16.79 trillion won in the last three months of 2019, a 10.4 per cent decline from a year earlier. Its operating profit from the semiconductor business was 3.45 trillion won, down 55 per cent over the cited period.

“The memory business reported an on-year decline in profit as DRAM prices continued their downward trend despite rising shipments,” Samsung said.

But its logic chip business posted a rise in profit due to increasing demand for high-resolution image sensors and high performance computer chips, it said. (IANS)

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