[Click eStock] "Samsung Electronics Faces Supply Burden Next Year Due to Increased DRAM Supply... Target Price Down"

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[Asia Economy Reporter Song Hwajeong] NH Investment & Securities on the 1st downgraded the target price of Samsung Electronics from 110,000 KRW to 95,000 KRW, citing increased supply of DRAM leading to greater supply-demand pressure next year. The investment rating was maintained at 'Buy.'

Due to increased capital investment by companies following favorable DRAM supply conditions, an increase in DRAM supply is expected from the second half of this year. Doh Hyunwoo, a researcher at NH Investment & Securities, stated, "Annual DRAM shipments this year are expected to increase by 24% for Samsung Electronics, 20% for SK Hynix, and 26% for Micron compared to the same period last year," adding, "Due to non-face-to-face demand caused by COVID-19, the demand visibility for PCs and servers, which are currently favorable, is somewhat low for 2022."

Development delays are also cited as risk factors. Researcher Doh analyzed, "Samsung Electronics is experiencing delays in development compared to competitors in the latest processes such as 14nm DRAM and 176-layer NAND, and due to strategic missteps, it missed the optimal timing for investment expansion, resulting in a decline in market share, which is also a risk."

Second-quarter earnings are expected to be favorable. NH Investment & Securities estimated Samsung Electronics' second-quarter sales to increase by 3% from the previous quarter to 61.9 trillion KRW, and operating profit to rise by 9% to 10.2 trillion KRW. Researcher Doh said, "The increase in operating profit will be led by semiconductors," and added, "The estimated operating profit by division is expected to be 5.7 trillion KRW for the semiconductor division, up 69% from the previous quarter; 300 billion KRW for the display division, up 17%; 3.2 trillion KRW for the IM (IT & Mobile) division, down 28%; and 800 billion KRW for the CE (Consumer Electronics) division, down 25%."

This content was produced with the assistance of AI translation services.