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[Click eStock] "Samsung Electronics, Semiconductor Production Cut Effects... 'Money Move' Continues"

KB Securities forecasted that the effect of Samsung Electronics' semiconductor production cuts will begin to appear in earnest from the third quarter. As significant performance improvements are expected from the second half of the year, net buying by foreign investors is likely to continue for the time being.


On the 24th, Dongwon Kim, a researcher at KB Securities, said, "The DRAM shipments of the three global memory semiconductor companies in the second quarter exceeded expectations, marking the start of inventory reduction, and from the third quarter, the supply reduction effect due to production cuts will be in full swing." He added, "Regarding semiconductor demand, starting with the iPhone 15 in the third quarter, an improving trend is expected sequentially in PCs and servers in the fourth quarter." He further stated, "Even assuming no significant increase in semiconductor demand in the second half, the supply reduction effect alone will bring the supply and demand balance of DRAM and NAND close to equilibrium." The investment opinion on Samsung Electronics was maintained as 'Buy' with a target price of 85,000 KRW.


The securities industry speculated that memory semiconductor inventories likely entered a declining trend in the second quarter. It is estimated that in the upcoming fourth quarter, the average inventory of the three global memory semiconductor companies (Samsung Electronics, SK Hynix, Micron) will decrease by 23% compared to the first quarter.


Accordingly, the net buying trend of foreigners in Samsung Electronics is expected to continue for the time being. Since the beginning of this year, the net buying volume by foreigners in the entire KOSPI market is 11 trillion KRW, of which Samsung Electronics accounts for 9.46 trillion KRW, representing 86%. This is the highest since the Korea Exchange began compiling statistics in 1998.


Researcher Kim said, "Samsung Electronics, which has secured sufficient semiconductor production capacity and abundant cash, is highly likely to be the winner after this semiconductor downcycle, and semiconductor supply and demand improvement is expected to accelerate from the second half, leading to an entry into the semiconductor upcycle next year." He added, "With the forecast of a weak dollar and a strong won trend, foreign exchange gains can also be expected." He concluded, "The expectation of an expanded performance improvement of Samsung Electronics in the second half of this year is considered a factor for foreign net buying, and the money movement toward Samsung Electronics is expected to continue for the time being."


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