[Click eStock] Samsung Electronics Maintains 100,000 Won as Core Infrastructure for Semiconductor Metaverse

[Asia Economy Reporter Lee Seon-ae] KB Securities announced on the 26th that it maintains a buy rating and a target price of 100,000 KRW for Samsung Electronics. This is because the 4th quarter DRAM prices are expected to exceed forecasts. There is also optimism that semiconductors will emerge as a key infrastructure for building the metaverse ecosystem in the future.

First, contrary to concerns, the 4th quarter DRAM price negotiations are expected to proceed smoothly without significant resistance in price or volume, leading to 4th quarter DRAM prices and order volumes exceeding expectations. In particular, the 4th quarter DRAM orders from North American cloud providers such as Amazon and Microsoft, as well as PC manufacturers like Dell and HP, are estimated to exceed previous forecasts by +30%. This is attributed to ① server investments for building metaverse platforms, ② increased demand for enterprise PCs, and ③ DRAM inventory reduced to one-third compared to the 3rd quarter. Therefore, the decline in 4th quarter DRAM fixed prices is expected to be significantly smaller than market research firms’ forecasts (-7~10% QoQ).

Recently, global PC manufacturers have increased semiconductor orders for the first time in seven months. This is due to ① easing of component supply shortages, which has improved demand visibility for 2022, and ② a surge in enterprise PC demand following the With-Corona period. Accordingly, the DRAM spot price sensitive to PC demand (DDR4 8GB) has successfully reversed its decline since July, indicating it has passed the bottom. Especially since DRAM spot prices have historically served as a leading indicator for fixed prices, DRAM prices are expected to form a bottom in the first quarter of next year.

Semiconductors are expected to emerge as a core infrastructure for building the metaverse ecosystem going forward. This is because high-performance graphics and high-capacity semiconductors are essential for cloud, 5G edge computing, and headsets (VR, XR) required to realize the metaverse. Dongwon Kim, a researcher at KB Securities, stated, "Metaverse headsets (VR, XR), which are estimated to grow tenfold within the next five years, require memory capacity similar to smartphones, and Apple’s market entry in 2022 (launch of XR devices) is expected to act as a growth catalyst." He added, "Moreover, Samsung Electronics’ stock price has risen only +7% from this year’s low, making it relatively more attractive compared to SK Hynix (+28% rise from the low)."