Earnings Outlook Lowered, Yet “Samsung Electronics at 560,000 Won” — What Supports the Semiconductor Optimism?

[Financial News] Samsung Electronics and SK hynix both closed higher, while an analysis emerged that the memory semiconductor supply shortage will worsen next year. Despite earnings pressure from a stronger won, productivity improvements and expanded sales of high-value products are expected to support profits.
On the 9th, Samsung Electronics closed at 270,250 won, up 0.28% from the previous trading day, while SK hynix finished at 1,856,000 won, up 3.63%.
Hyungkeun Ryu, a researcher at Daishin Securities, maintained target prices of 560,000 won for Samsung Electronics and 3.2 million won for SK hynix. These levels are approximately 107% and 72% higher, respectively, than their closing prices that day. Although he lowered his short-term earnings estimates, he maintained his optimistic outlook for the medium to long-term industry conditions.
The key basis for the outlook is supply struggling to keep up with demand. Ryu said, "We reaffirmed our previous view that the severity of the supply shortage will increase in 2027 compared with 2026."
According to the securities industry, some customers have indicated demand of more than 40 billion Gb for HBM in 2028. The volume requested by a single customer exceeds this year’s estimated global HBM shipments of 36.6 billion Gb. Requests to extend the contract period to more than five years have also emerged during negotiations over long-term contracts, analysts explained.
Meanwhile, global DRAM production growth next year is expected to remain in the low 20% range. Even if factories are expanded, it takes time to begin actual production, while changes in processes and product mix also affect output. The analysis said that expanding demand and supply constraints together will support memory manufacturers’ pricing power.
The immediate burden is the exchange rate. Reflecting the decline in the won-dollar exchange rate, Daishin Securities lowered its operating-profit forecast for Samsung Electronics in the third quarter of this year from 110 trillion won to 105.5 trillion won, and its forecast for SK hynix from 77 trillion won to 74.7 trillion won. The assessment was that converting dollar-denominated revenue into won would weigh on earnings.
However, productivity improvements and expanded sales of high-value products are expected to partially offset the exchange-rate burden. Ryu forecast, "The decline in operating profit will be limited relative to the extent of the exchange-rate decline."
Samsung Electronics’ yield for its 1c DRAM process is estimated to have improved to approximately 80%. Yield refers to the proportion of good products in total output; the higher it is, the lower the cost burden. Some analysts also argue that the improved yield creates room to use the process not only for HBM4 but also, to some extent, for producing conventional DRAM.
SK hynix expects the average selling price of DRAM to rise as shipments of HBM4 gain momentum. Increasing the share of high-value products could reduce the impact of the weaker won, the company said.
Ryu said, "In an environment with insufficient production capacity, customers tend to state demand well above their actual needs in order to secure sufficient volumes," adding, "Because the possibility of a contraction in artificial intelligence (AI) capital spending due to macroeconomic uncertainty is also a variable, the key to gauging future industry conditions will be whether strong demand signals translate into actual orders and shipments."
[email protected] Choi Doo-sun Reporter