How? The headline is both correct and very clear, it’s just four words. If the reader doesn’t understand what profit means, the problem is on their side.
People blame the media for the weirdest things these days.
I would argue it's a little bit of both. You have to admit, they deliberately are taking advantage of the fact that this sounds like a very interesting statistic "wow!! Profit fell by this huge amount!!" when a lot of it could be a very deliberate decision by the company to spend more money. If revenue fell by more than profit, they would pick that instead.
The standard for headlines is to get the reader to click, not to inform the reader (even when the article itself is quite informative). I've been reading books with marketing advice, and one of them literally suggests the practice of "false facts," where you deliberately compare things that shouldn't be compared in order to make your product seem more appealing, for example an audiobook that costs $25 to an in-person class that costs $10,000. This headline is kinda-sorta doing that, albeit on a scale of 2/10.
I agree. I misunderstood profit as gross income, and even with a quarter of negative profit, a business may very well be doing fine depending on their profit margin (electronics ~2-10%).
The drop is primarily due to lack of demand and overproduction in memory chips. From the Financial Times:
Samsung Electronics reported a 95 per cent drop in first-quarter profits on Thursday, as tech demand remained sluggish in the face of inflation and higher interest rates.
The Korean semiconductor giant’s operating profit fell to Won640bn ($478.6mn) from Won14.12tn in the first three months of 2022, amid a sharp drop in global demand for memory chips. The results were consistent with estimates released earlier this month, when Samsung said it would make a “meaningful” cut in memory production to ease a glut.
On Thursday the company said it expected a “limited demand recovery” as major cloud service providers invest more conservatively and customers adjust their inventories.
I bought a number of them for $200 each last year, so compared to that and considering these are still among top of the line as SSDs go: Yes, I think they are great deals. $40 might not sound like much, but it is in quantities.
The price could get even lower and that would make for an even greater deal too, of course.
And if anyone thinks it's just the Samsung 980 PRO, other brands with products at a similar quality tier are priced likewise: The 2TB Crucial P5 Plus for $132 USD[1][2] and the 2TB Western Digital SN850X for $160[3].
Any day now there will be a resurgence of that beyond-parody cryptocurrency based on the idea of burning through as many SSDs as possible. Proof-of-Electronics-Junk is sound money!
(I think it’s Chia but can’t be bothered to actually google this stuff anymore, it’s depressing.)
The real magic is found in Apple charging 690 EUR for an upgrade to 2TB from 512GB on a MacBook Pro (0.43/gb), or 2760 EUR for 8TB (0.37/gb). Considering the 2TB 980 pro for $160 USD, (0.08/gb), it always truly pains me to pay the Apple tax.
Since I’m building a solo staking machine for my Ethereum, I’m in the market for a 2 TB ssd, since that is what most guides say to get. Why would I pick the $160 Samsung when I see ones from other vendors for almost half the price, $59-69 on Amazon? Is there really a difference?
Interesting link. If I'm reading that chart right these are the lowest profits reported by Samsung since Q1 2009 (that is around ~600 billion Won both then and now).
When a user is expected to have to repurchase a product in the future (e.g. phone upgrade), do they look at it as squeezing as much revenue out of a single user whilst they own a single device, or over lifetime ownership of many devices?
You can imagine a scenario where they squeeze an extra 20% revenue whilst that user owns their device (great for this quarter) at the cost of 100% of future revenue when the user moves to another brand on renewal.
If the average phone upgrade is 21 months [0], then this feels like a short enough timeframe for this to be felt in the numbers.
Which models? My personal S series has no such thing but I was surprised that my work A series came with ads and stuff. Seems to be a similar strategy to Microsoft pushing crap on the Home versions of Windows but not doing so on the corporate versions.
I'm not sure; I think "Samsung Profits Plunge 200%" would be pretty easy to make sense of, in that it would mean "They lost as much this [period] as they gained last [period]". Likewise, you could represent that as -200% change, or -100% of last quarters profits.
If profit can refer to a loss then why would you assume they had a positive profit in the last period? Perhaps not quite so easy to make sense of.
In any case, hopefully next quarter their losses can crater by 2000%, i.e., go from a small profit to a larger one and get back to about where they were.
It's still pretty meaningless unless you have some idea what the previous profit was (which the average headline reader probably doesn't). 95% of last quarter's profit could be a trivial amount or a huge amount. If last quarter's profit was $100 and this quarter's was $5, describing it as a "plunge" is misleading as it hasn't really changed.
The Attention Economy/ads have directly or indirectly funded cheap smartphones/chips for 15 years now. Got to be some sort of peak since attention is scarce and shrinking.
Future Demand modeling doesnt really take collective availble attention into account. I think we are going to see demand mainly driven by machine to machine requiremnts. The human requirement are probably peaking.
Reference slide 5 from the cow's mouth[1] for this article's unlinked source.
On first blush, the headline just looks like a consequence of quarterly revenue miss when there's an implied floor to both cost of sales and operating expense in the face of elevated FX headwinds and substantial macro uncertainty.
TSMC posted poor results last week, not dissimilar to Texas Instruments on Tuesday. Now we see Samsung join the club, and the trend is likely to be no different for Intel after market close today.
All the while Nvidia has been trading in the $270-280 range on pure AI hype euphoria, completely oblivious to $2+ billion of deprecated Ampere architecture inventory glut, the export restrictions hammer that dropped last year when China sales alone accounted for over 21% of FY22 revenue, and more recently, AIB manufacturers informed that RTX 4070 production is being paused a mere 1 week after launch in an attempt to prevent inventory buildup, just to call out a few.
Few events show how rotten the economic incentives are than this GPU scarcity: there are now massive inventories and over-production, huge demand, but prices are still sky high. Nvidia would rather destroy its inventory than go for pre-crypto prices. A massive amount of users stuck on 5-8 year old cards with still no good choices to upgrade.
The big picture I'm seeing is there's a game being played[1], but to your point, AMD did respond to RTX 4070 launch by dropping prices on RX 6800 series GPUs[2].
Because gaming GPUs are not really profitable to AMD.
As a reference, between 2008 and 2011 when ATI/AMD had the biggest technological lead over Nvidia's disaster architectures, even then when AMD was at near 50% market share it merely posted 19M of profits across 3 financial years! In the same time frame, despite terrible performances, Fermi architecture already going into the 400w consumption range, even then Nvidia posted billions of profits across the same time frame.
AMD has simply stopped competing with Nvidia on prices, it's nonsense to them.
Nowadays both Nvidia and AMD sell more GPUs to datacenters and super computers, where net margins are also twice as high than they do to gamers.
Essentially both AMD and Nvidia are abandoning the gaming aspect of their hardware, stopped competing price-wise, instead they prefer both to sit on higher margins in the gaming market and focus on GPGPU aspect for business, research, automotive, AI, etc, etc, where the real money and growth is.
The fact that this hardware is also able to crunch rendering calculations is more and more of a side effect.
AMD has notably cornered the console market with the Xbox One and Series X|S, PS4 and PS5. With the Steam Deck and now the Asus ROG Ally, they're starting to get themselves a position in the handheld market too.
Is OEM integration profitable though? I would imagine Microsoft and Sony squeezed the best deal and maybe it will bring profit in later years when the research debt is paid
Judging by their conservative clocks and odd configurations (ex steam deck is a 4-core) these are some of the lower bind parts that would otherwise not be high-value final products on the open PC market.
Perhaps even "defective" (ex failed PCIe lanes) in some way that makes them useless. I always figured this was a "use the whole pig" situation.
This isn't entirely make sense to me, I thought AMD was very far behind on GPGPU. Do these supercomputer and data center projects use things like ROCm and OpenCL, and solve the software issues on their side? Does AMD compete on price there?
I didn't say it wasn't true I was just trying to say it didn't make sense to me. If you're trying to build a giant supercomputer it seems like you would pick something where the software works. But maybe they are using ROCm. It seems like that only works for the higher end stuff. Maybe they're planning on running stuff that's already been built on OpenCL, and AMD is competing on the price for the publicity.
Contrary to what other posters are saying, I do think AMD is actually trying to compete; for example, they finally gave up on OpenCL and are trying to play catch-up to Nvidia via ROCm, effectively allowing you to run CUDA on AMD's server GPU offerings. And on the gaming side their top-of-the-line offering, the 7900 XTX, is ~$600 cheaper (aka 60%!) at MSRP than Nvidia's top-of-the-line RTX 4090 — and the prices you'd pay from e.g. resellers on eBay are even more skewed towards Nvidia.
That being said, they're just way, way behind. Nvidia can charge what they do simply because AMD isn't great at making GPUs. In gaming AMD never caught up to Nvidia's raytracing perf, and AMD's attempt to clone DLSS is significantly less performant. Meanwhile in AI/ML the industry consolidated around CUDA because OpenCL was never that great, and — Nvidia owning the standard, and having built around it for over a decade, gives them a really big advantage. Plus, every GPU sold in the last decade+ by Nvidia supports CUDA, whereas only the new server GPUs from AMD support ROCm.
Nvidia has executed incredibly well for decades: they pioneered shader programming, CUDA, raytracing, and DLSS. Arguably they even invented the GPU itself with the GeForce 256 in 1999 (as opposed to earlier "accelerator" cards). I struggle to think of anything AMD has done in the GPU space that matches even one of those accomplishments... Their only slight win is having OSS drivers for Linux, but honestly, that doesn't sell a whole lot of GPUs.
AMD caught up to Intel on the CPU side in part thanks to Intel's failures. Nvidia just hasn't fumbled.
Edit: Also, Intel is trying to edge their way into the GPU market as well with their Arc line of discrete GPUs, which is relatively affordable. They compete well on price, especially at the lower end: the A750 and A380 obliterate anything at their price points ($239 and $119, respectively). But, well, "at their price points" is a pretty critical part of that sentence. Their top-tier card, the A770, can barely eke out wins against the lower end of Nvidia's last-gen cards.
And re: 2008-2011 ATI comparisons from a sibling comment — by 2010 Nvidia's Fermi architecture was reliably beating ATI again, albeit with higher power draw, and in 2007 they had just launched CUDA which ended up being the most lucrative market segment for GPUs. In retrospect I think Fermi was much less of a flop than it seemed (and it was a fairly brief one compared to Intel's CPU woes).
Agreed. At this point, it's clearly artificial GPU scarcity. We felt it early in consumer staples[1], and the grifting by auto dealers wasn't imagined either[2]...I won't even bother with the housing market to preserve my sanity. GPUs are really no different.
Consumers need to wake up and smell the underlying meta[3].
Not only artificial GPU scarcity. It is obviously clear that AMD and Nvidia are deliberately avoiding fighting each other on prices, something they got punished for in 2008, except that at the time it was done in secret meetings, now it's literally AMD playing alone and avoiding to compete completely on price.
They compete on price, just not as much as before
The 7900xtx is much better deal at 1000$ than 1200$ for the 4080, yet and isnt pushing prices as low as they used to.
The difference is AMD actually discounts old GPUs and CPUs, a 6950XT can be found for around 500$ or less.
As long as both have unsold inventory of their older architectures, they will not lower prices of the current generation, and they won't enter a price war. Intel's next generation might be able to exert some pressure, but by then AMD and Nvidia will probably have cleared their old inventory anyway.
I am running on an ancient GTX 1070 and would like to upgrade to an RTX capable card, but there's no way I'm paying the current prices. I'm not sure why the prices remain high, after the crypto crash and pandemic shortages have eased. Cost of the Nvidia license? Cost of materials + production? Unrealistic profit projections? Probably a mix of all three.
The article (and the accounting world in general) misleadingly uses words like "loss" to mean "not as much as the last time we measured," unlike how most laypeople interpret the word to mean "expenses exceeded revenue so we are in the red."
In fact they are still in the black, only much less so than before. You can't "lose" something that wasn't yours to begin with.
Samsungs entire history is of them surviving collapses in their profitability while they endured until things turned around, so I doubt they’re all that shaken.
Samsung Electronics is heavily involved in the cyclical semiconductor business which is a business infamous for violent downswings and they seem to be taking a beating from the memory glut.
They're still building them, it's not like you can build a fab in 2-3 years. The push to increase (global) chip production capacity is a long term strategy. And for many it's also national security strategy (moving production away from Taiwan). This plunge in profits is rather just a temporary dip, I don't think that anyone expects that chip demand will not be generally growing over the next 10-20 years.
In a few years I wonder if governments will be looking at the massive subsidies they're paying every year just to keep these fabs afloat during the obvious upcoming chip glut and wonder what they were thinking.
Demand for chips will continue to grow (historical growth is about 5% a year) but I don't think the market can support a dozen new fabs around the world without taxpayer money. that's just too much supply and extremely expensive insurance for "national security".
China attacking Taiwan is a very real possibility, and costs of completely losing access to Taiwanese chips would be much higher than these subsidies. Imo, this expensive insurance is necessary.
There was an opportunity here to explain why this isn't a big deal.
This entire article is devoid of any synthesis or value added information. If I saw this on DNYUZ I wouldn't give it a second look, but CNN has lesser aspirations .
By design, news wire articles (business, politics, etc) don't have value-added synthesis or insightful analysis because the generic content is created quickly for fast dissemination.
It's not an "opinion piece" like a Matt Levine article or The Economist editorial/analysis.
92 comments
[ 4.4 ms ] story [ 164 ms ] threadLooking at profit alone doesn’t tell how much product they actually shipped. It might be that they sold more units but at razor-thin margins.
People blame the media for the weirdest things these days.
But the problem with the headline is not that it somehow sneakily conflates revenue and profit.
The standard for headlines is to get the reader to click, not to inform the reader (even when the article itself is quite informative). I've been reading books with marketing advice, and one of them literally suggests the practice of "false facts," where you deliberately compare things that shouldn't be compared in order to make your product seem more appealing, for example an audiobook that costs $25 to an in-person class that costs $10,000. This headline is kinda-sorta doing that, albeit on a scale of 2/10.
Just splurging on new sites/equipment/assets could drop their profit to zero while their income remained the same.
Samsung Electronics reported a 95 per cent drop in first-quarter profits on Thursday, as tech demand remained sluggish in the face of inflation and higher interest rates.
The Korean semiconductor giant’s operating profit fell to Won640bn ($478.6mn) from Won14.12tn in the first three months of 2022, amid a sharp drop in global demand for memory chips. The results were consistent with estimates released earlier this month, when Samsung said it would make a “meaningful” cut in memory production to ease a glut.
On Thursday the company said it expected a “limited demand recovery” as major cloud service providers invest more conservatively and customers adjust their inventories.
Don't buy SMR hard drives.
There’s really no need to make it personal.
Also, 2TB for 160 in 2023 doesn’t sound like a great deal.
The price could get even lower and that would make for an even greater deal too, of course.
And if anyone thinks it's just the Samsung 980 PRO, other brands with products at a similar quality tier are priced likewise: The 2TB Crucial P5 Plus for $132 USD[1][2] and the 2TB Western Digital SN850X for $160[3].
[1]: https://www.newegg.com/Crucial-2TB-P5-Plus/p/20-156-281
[2]: https://www.amazon.com/dp/B098WKQRDL/
[3]: https://www.newegg.com/western-digital-2tb-black-sn850x-nvme...
A few years ago Ive been purchasing 256GB for 40? or so USD
(I think it’s Chia but can’t be bothered to actually google this stuff anymore, it’s depressing.)
From memory, there's a firmware fix for it though.
When a user is expected to have to repurchase a product in the future (e.g. phone upgrade), do they look at it as squeezing as much revenue out of a single user whilst they own a single device, or over lifetime ownership of many devices?
You can imagine a scenario where they squeeze an extra 20% revenue whilst that user owns their device (great for this quarter) at the cost of 100% of future revenue when the user moves to another brand on renewal.
If the average phone upgrade is 21 months [0], then this feels like a short enough timeframe for this to be felt in the numbers.
0: https://www.counterpointresearch.com/smartphone-users-replac...
Revenue 95% plunge would be somewhat different!
Margin 95% plunge would too.
In any case, hopefully next quarter their losses can crater by 2000%, i.e., go from a small profit to a larger one and get back to about where they were.
Future Demand modeling doesnt really take collective availble attention into account. I think we are going to see demand mainly driven by machine to machine requiremnts. The human requirement are probably peaking.
On first blush, the headline just looks like a consequence of quarterly revenue miss when there's an implied floor to both cost of sales and operating expense in the face of elevated FX headwinds and substantial macro uncertainty.
TSMC posted poor results last week, not dissimilar to Texas Instruments on Tuesday. Now we see Samsung join the club, and the trend is likely to be no different for Intel after market close today.
All the while Nvidia has been trading in the $270-280 range on pure AI hype euphoria, completely oblivious to $2+ billion of deprecated Ampere architecture inventory glut, the export restrictions hammer that dropped last year when China sales alone accounted for over 21% of FY22 revenue, and more recently, AIB manufacturers informed that RTX 4070 production is being paused a mere 1 week after launch in an attempt to prevent inventory buildup, just to call out a few.
[1] https://images.samsung.com/is/content/samsung/assets/global/...
https://store.steampowered.com/hwsurvey/videocard/
[1] https://scholarworks.umass.edu/econ_workingpaper/343/
[2] https://news.ycombinator.com/item?id=35663511
As a reference, between 2008 and 2011 when ATI/AMD had the biggest technological lead over Nvidia's disaster architectures, even then when AMD was at near 50% market share it merely posted 19M of profits across 3 financial years! In the same time frame, despite terrible performances, Fermi architecture already going into the 400w consumption range, even then Nvidia posted billions of profits across the same time frame.
AMD has simply stopped competing with Nvidia on prices, it's nonsense to them.
Nowadays both Nvidia and AMD sell more GPUs to datacenters and super computers, where net margins are also twice as high than they do to gamers.
Essentially both AMD and Nvidia are abandoning the gaming aspect of their hardware, stopped competing price-wise, instead they prefer both to sit on higher margins in the gaming market and focus on GPGPU aspect for business, research, automotive, AI, etc, etc, where the real money and growth is.
The fact that this hardware is also able to crunch rendering calculations is more and more of a side effect.
Perhaps even "defective" (ex failed PCIe lanes) in some way that makes them useless. I always figured this was a "use the whole pig" situation.
https://en.wikipedia.org/wiki/Frontier_(supercomputer) https://en.wikipedia.org/wiki/LUMI
There's lots of demands for AMD hardware in datacenters and supercomputers.
AMD and Nvidia sell the same thing made at the same place in Taiwan.
Nvidia dove in like 1998. AMD sold it's moat in like, 2005.
That being said, they're just way, way behind. Nvidia can charge what they do simply because AMD isn't great at making GPUs. In gaming AMD never caught up to Nvidia's raytracing perf, and AMD's attempt to clone DLSS is significantly less performant. Meanwhile in AI/ML the industry consolidated around CUDA because OpenCL was never that great, and — Nvidia owning the standard, and having built around it for over a decade, gives them a really big advantage. Plus, every GPU sold in the last decade+ by Nvidia supports CUDA, whereas only the new server GPUs from AMD support ROCm.
Nvidia has executed incredibly well for decades: they pioneered shader programming, CUDA, raytracing, and DLSS. Arguably they even invented the GPU itself with the GeForce 256 in 1999 (as opposed to earlier "accelerator" cards). I struggle to think of anything AMD has done in the GPU space that matches even one of those accomplishments... Their only slight win is having OSS drivers for Linux, but honestly, that doesn't sell a whole lot of GPUs.
AMD caught up to Intel on the CPU side in part thanks to Intel's failures. Nvidia just hasn't fumbled.
Edit: Also, Intel is trying to edge their way into the GPU market as well with their Arc line of discrete GPUs, which is relatively affordable. They compete well on price, especially at the lower end: the A750 and A380 obliterate anything at their price points ($239 and $119, respectively). But, well, "at their price points" is a pretty critical part of that sentence. Their top-tier card, the A770, can barely eke out wins against the lower end of Nvidia's last-gen cards.
And re: 2008-2011 ATI comparisons from a sibling comment — by 2010 Nvidia's Fermi architecture was reliably beating ATI again, albeit with higher power draw, and in 2007 they had just launched CUDA which ended up being the most lucrative market segment for GPUs. In retrospect I think Fermi was much less of a flop than it seemed (and it was a fairly brief one compared to Intel's CPU woes).
Consumers need to wake up and smell the underlying meta[3].
[1] https://www.bls.gov/opub/btn/volume-12/measuring-shrinkflati...
[2] https://www.bls.gov/opub/mlr/2023/article/automotive-dealers...
[3] https://scholarworks.umass.edu/econ_workingpaper/343/
The difference is AMD actually discounts old GPUs and CPUs, a 6950XT can be found for around 500$ or less.
Samsung is an enormous conglomerate of which Samsung Electronics is only one of many sub-companies.
The article (and the accounting world in general) misleadingly uses words like "loss" to mean "not as much as the last time we measured," unlike how most laypeople interpret the word to mean "expenses exceeded revenue so we are in the red."
In fact they are still in the black, only much less so than before. You can't "lose" something that wasn't yours to begin with.
Samsung Electronics is heavily involved in the cyclical semiconductor business which is a business infamous for violent downswings and they seem to be taking a beating from the memory glut.
Demand for chips will continue to grow (historical growth is about 5% a year) but I don't think the market can support a dozen new fabs around the world without taxpayer money. that's just too much supply and extremely expensive insurance for "national security".
This entire article is devoid of any synthesis or value added information. If I saw this on DNYUZ I wouldn't give it a second look, but CNN has lesser aspirations .
If you look at the byline in this CNN article, you'll notice it says "Reuters".
Reuters offers a "news wire" service with articles of generic factoids and syndicated to various news outlets like CNN: https://en.wikipedia.org/wiki/News_agency
By design, news wire articles (business, politics, etc) don't have value-added synthesis or insightful analysis because the generic content is created quickly for fast dissemination.
It's not an "opinion piece" like a Matt Levine article or The Economist editorial/analysis.
Gee, we switched to manufacturing high end parts nobody buys ... and people stopped buying our wares, what to do indeed.