Samsung is optimistic about the potential of AI-powered smartphones, despite losing its position as the top-selling smartphone manufacturer to Apple.

Samsung has reported its fourth consecutive quarter of declining profits, marking a challenging year that also saw the company lose its position as the world’s leading smartphone manufacturer. The South Korean tech giant experienced a 35% decrease in profit, with operating profits dropping to 2.8 trillion won (approximately $2.1 billion) in the December quarter, compared to 4.3 trillion won ($3.5 billion) the previous year. This decline reflects ongoing sluggish demand for consumer devices and semiconductor chips.

Despite these challenges, Samsung remains optimistic about a resurgence in mobile device demand in 2024. The company believes that new products like AI-powered smartphones will drive an improvement in demand. Apple overtook Samsung in the fourth quarter, holding 20.1% of global market share in 2023, just slightly ahead of Samsung’s 19.4%, according to IDC.

Samsung acknowledged lower smartphone sales in the fourth quarter but noted an uptick in demand for high-end smartphones and increased tablet sales due to new product launches. The company has faced difficulties, including a supply shortage during the COVID-19 pandemic and a decline in semiconductor demand. Samsung posted a loss of 14.9 trillion won (about $11.2 billion) for its device solutions unit, including the memory chip business, in 2023, compared to a profit of 23.8 trillion won ($17.8 billion) the previous year.

While Samsung expects a gradual market recovery in 2024, it anticipates ongoing challenges due to macroeconomic uncertainties and geopolitical issues. The company predicts moderate improvements in earnings in the first half of the year, with more significant improvements in the second half. Samsung’s shares dipped by 1.6% in Seoul following the announcement.