"Samsung Electronics' Q4 Semiconductor Profit to Surge Fivefold... Target Price at 160,000 Won" [Click e-Stock]

KB Securities: "Lowest Valuation Among Global DRAM Manufacturers"

On December 11, KB Securities stated that "Samsung Electronics' semiconductor operating profit in the fourth quarter is expected to surge fivefold year-on-year," forecasting the company is entering a profit surge cycle.

In a report released on this day, KB Securities maintained its target price for Samsung Electronics at 160,000 won and continued to recommend the company as its top pick in the semiconductor sector. Analysts Kim Dongwon and Kang Dahyun explained, "In 2026, shipments of high bandwidth memory (HBM) are expected to increase threefold (203%) compared to the previous year, far outpacing the global HBM market shipment growth rate of 32% by a factor of six."

Samsung Electronics' fourth-quarter results are projected to significantly exceed consensus, with sales reaching 91 trillion won and operating profit rising to 19 trillion won-approximately three times higher than the previous year (a 56% increase quarter-on-quarter and a 192% increase year-on-year). In particular, fourth-quarter semiconductor operating profit is estimated at 15 trillion won, representing a 116% increase from the previous quarter and a 422% increase from a year earlier.

The key driver of this earnings improvement is the strong performance of DRAM prices. The fourth-quarter DRAM operating margin is expected to reach 53%, up 21 percentage points from 32% in the same period last year. KB Securities analyzed, "This is because, as of the fourth quarter, DRAM customers' demand fulfillment rate is only 60%, and server DRAM demand fulfillment rate remains below 50%, resulting in severe supply shortages and DRAM prices far exceeding market expectations."

The analysts predicted that Samsung Electronics will be the biggest beneficiary of HBM market growth. Next year, Samsung Electronics is expected to expand its HBM production capacity by 30% and secure a diversified HBM customer base, including GPU and custom AI chip (ASIC) companies such as Google, Microsoft, Amazon, Meta, Nvidia, and AMD. Accordingly, HBM sales in 2026 are estimated to triple from the previous year to 26 trillion won.

In particular, HBM4 is expected to drive performance growth. Samsung Electronics will begin mass production of HBM4 in the first quarter of next year, with shipments of HBM4 projected to increase significantly from the second quarter onward. This is due to rising demand from ASIC companies for HBM4 integration via Broadcom, as well as the anticipated start of HBM4 shipments for Nvidia's "Rubin" platform.

Next year, the revenue share for HBM products is expected to be 55% for HBM4 and 45% for HBM3E, with HBM4 prices anticipated to command up to a 58% premium over HBM3E. The analysts emphasized, "Samsung Electronics' HBM4, which has a competitive edge in speed, is expected to be the greatest beneficiary as the AI multi-ecosystem expands across GPUs, ASICs, and more."

They added, "Despite securing the largest DRAM production capacity, Samsung Electronics currently has the lowest valuation among global DRAM manufacturers, indicating an extremely undervalued phase."