[Click eStock] "Samsung Electronics Enters Memory Semiconductor Profit Zone... Target Price Maintained"

KB Securities maintained its buy rating and target price of 95,000 KRW for Samsung Electronics on the 11th, stating that "this year's operating profit from memory semiconductors is expected to increase by 27 trillion KRW compared to last year."

Samsung Electronics announced that its provisional consolidated operating profit for last year was 6.54 trillion KRW, and sales amounted to 258.16 trillion KRW. Operating profit decreased by 84.92% and sales decreased by 4.91% compared to the same period last year. The photo shows Samsung Electronics Seocho Building in Seocho-gu, Seoul, on the 9th. Photo by Jinhyung Kang aymsdream@

On the same day, KB Securities researchers Dongwon Kim and Jooyoung Park explained, "Operating profit from memory semiconductors (DRAM, NAND) in the first quarter is expected to turn positive for the first time in six quarters since the third quarter of 2022," adding, "Shipments of 8-layer HBM (High Bandwidth Memory) 3E are expected to begin from the third quarter, alleviating concerns about HBM competitiveness, and the foundry business is expected to return to profitability from the second half of the year due to increased utilization rates of advanced processes."

Researchers Kim and Park stated, "In particular, an improvement in the profitability of memory semiconductors is expected this year," noting, "DRAM is expected to expand the proportion of the most advanced wafer processes to over 40% in the second half of this year, driving future profitability improvements. NAND is projected to turn profitable this year with a 12 trillion KRW improvement in profitability compared to last year, due to an increase in average selling prices (ASP) and the reversal of inventory valuation losses on a trillion KRW scale."

Samsung Electronics' first-quarter operating profit is estimated at 49 trillion KRW, a 669% increase year-on-year, driven by improved performance in memory semiconductors (DS) and smartphones (DX). Researchers Kim and Park said, "First-quarter operating profit from memory semiconductors is expected to turn positive for the first time in six quarters since the third quarter of 2022, improving by 2.3 trillion KRW from the previous quarter to 1.1 trillion KRW." However, first-quarter display (DP) operating profit is expected to decline by 61% year-on-year due to weak iPhone sales, and system LSI (non-memory) is expected to continue operating at a loss due to decreased foundry utilization rates and fixed cost burdens.

Researchers Kim and Park estimated first-quarter operating profits by segment as DS 200 billion KRW, DX 3.8 trillion KRW, DP 300 billion KRW, and consumer electronics (CE) & Harman 600 billion KRW, projecting that "this year, sales will increase by 18% from last year to 305 trillion KRW, and operating profit will increase by 403% to 33 trillion KRW." They also added, "From this year through 2026, the artificial intelligence (AI) market will see a rapid increase in AI penetration across all industries, with an explosion in artificial general intelligence (AGI) computations and the essential construction of AI-dedicated data centers capable of handling astronomical AI computations," emphasizing, "Samsung Electronics, which has secured a foundry ecosystem capable of producing AGI chips, is the only company that can provide turnkey supply along with memory. This is expected to be a positive factor for customers concerned about supply stability in the AI semiconductor market, which is currently facing supply shortages."