KB Securities Predicts Samsung Electronics to Benefit from Prolonged DRAM Price Increases
KB Securities forecasts that Samsung Electronics will be the biggest beneficiary of the ongoing increase in DRAM prices. The firm has maintained its Buy rating and target price of 130,000 KRW.
Analyst Kim Dong-won stated that Samsungs operating profit is expected to reach 64 trillion KRW next year, marking a 78% increase compared to the previous year. He attributes this growth to the sustained rise in the average selling price (ASP) of DRAM, which is projected to enhance profitability and lead to the companys best performance since 2018.
Kim further noted that due to past investments focused on high bandwidth memory (HBM), the expansion of new DRAM production capacity next year will remain limited despite a deepening supply shortage. He anticipates a reduction in NAND production capacity as part of a supply contraction strategy, which will compound the anticipated memory supply shortage and price increase.
He also highlighted that with a projected decrease in HBM4 supply from American competitors, the prices of general DRAM are expected to rise next year, leading to DDR5 margins exceeding those of HBM3E. This shift indicates a reversal in profitability. Samsung is likely to reconsider its production capacity allocation between general DRAM and HBM, which could enhance its negotiating power regarding HBM prices moving forward.
KB Securities predicts that the average DRAM capacity installed per server will increase by 15-20% compared to last year, driven by a surge in large-scale computational model adoption among cloud service providers (CSPs). Consequently, server DRAM demand is estimated to rise by 20% year-on-year.
Kim also suggested that Samsung is expected to directly benefit from the supply chain diversification strategies of big tech companies like NVIDIA, OpenAI, AMD, and Broadcom, as well as the expansion of the AI ecosystem.
Analyst Kim Dong-won stated that Samsungs operating profit is expected to reach 64 trillion KRW next year, marking a 78% increase compared to the previous year. He attributes this growth to the sustained rise in the average selling price (ASP) of DRAM, which is projected to enhance profitability and lead to the companys best performance since 2018.
Kim further noted that due to past investments focused on high bandwidth memory (HBM), the expansion of new DRAM production capacity next year will remain limited despite a deepening supply shortage. He anticipates a reduction in NAND production capacity as part of a supply contraction strategy, which will compound the anticipated memory supply shortage and price increase.
He also highlighted that with a projected decrease in HBM4 supply from American competitors, the prices of general DRAM are expected to rise next year, leading to DDR5 margins exceeding those of HBM3E. This shift indicates a reversal in profitability. Samsung is likely to reconsider its production capacity allocation between general DRAM and HBM, which could enhance its negotiating power regarding HBM prices moving forward.
KB Securities predicts that the average DRAM capacity installed per server will increase by 15-20% compared to last year, driven by a surge in large-scale computational model adoption among cloud service providers (CSPs). Consequently, server DRAM demand is estimated to rise by 20% year-on-year.
Kim also suggested that Samsung is expected to directly benefit from the supply chain diversification strategies of big tech companies like NVIDIA, OpenAI, AMD, and Broadcom, as well as the expansion of the AI ecosystem.
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