[Click eStock] "Samsung Electronics, Full Operation of US Austin Plant... Eases Semiconductor Concerns in Q2"

[Asia Economy Reporter Ji Yeon-jin] KB Securities announced on the 1st that it expects concerns caused by Samsung Electronics' semiconductor slump in the first quarter to be resolved from the second quarter, maintaining a buy rating and a target price of 105,000 won.

Dongwon Kim, a researcher at KB Securities, explained, "From the second quarter, the Austin production line in the U.S., which was halted due to a power outage, is expected to operate at full capacity, and issues with yield in the leading-edge foundry process and cost increases from the initial operation of the Pyeongtaek 2 plant are also expected to be resolved. The price increase range for DRAM and NAND is also estimated to expand."

Samsung Electronics' semiconductor operating profit for the second quarter is estimated at 5.3 trillion won, a 52% increase compared to the same period last year, confirming the bottoming out of first-quarter performance.

Samsung Electronics' first-quarter operating profit is estimated at 9.1 trillion won, a 41% increase year-on-year, expected to exceed market estimates (8.7 trillion won). This is analyzed to be because the operating profit proportion of the set business IM (smartphones) and CE (home appliances) in the first quarter (52 trillion won) surpasses that of the component business (semiconductors, DP (display)) profit proportion (3.9 trillion won, 43%).

First-quarter operating profits by sector are estimated as follows: semiconductors 3.5 trillion won, IM 4.2 trillion won, CE 1 trillion won, DP 300 billion won, and Harman 100 billion won. Second-quarter operating profit is expected to be 9.6 trillion won (up 6% quarter-on-quarter, up 18% year-on-year), with semiconductors sufficiently offsetting the decline in IM performance.

Researcher Kim said, "Semiconductor fixed prices, which remained flat in the first quarter, are expected to turn upward from April due to increased demand for servers, PCs, and communication equipment, leading to a significant rise in the second quarter. The fixed prices for server and PC DRAM in the second quarter are expected to increase by 20% compared to the first quarter, with the average fixed price of DRAM in the second quarter estimated to rise by 10% quarter-on-quarter."

NAND fixed prices are also expected to rise by 2-3% in the second quarter due to increased demand from telecom companies (SLC) and reduced 2D NAND production (MLC), marking the first price increase reversal in a year since the second quarter of 2020. However, as of April, mobile memory inventory is higher than average, mainly among Chinese companies, and future production disruptions due to shortages of key components (AP, DDI) are expected to be significant variables.