[Click eStock] "Samsung Electronics, Server Demand Improvement Next Year... Right Time to Increase Weight"

KB Securities Report

[Image source=Yonhap News]

[Asia Economy Reporter Minji Lee] KB Securities stated on the 24th that it is an opportune time to increase exposure to Samsung Electronics, as server demand is expected to improve in the first quarter of next year.

Recently, Samsung Electronics' stock price recorded 75,300 KRW, but despite a rise over the past three days, it has fallen more than 9% compared to the beginning of the year. However, from the perspective of price decline, the bottom of DRAM prices is likely to form in the first quarter of next year.

From the first half of next year, North American cloud companies are expected to actively invest in new servers to build metaverse platforms, and with Intel and AMD releasing new CPUs for servers, server replacement demand is anticipated to increase for the first time in five years since 2017. Dongwon Kang, a researcher at KB Securities, said, “Semiconductor prices will bottom out in the first quarter of next year, and cloud server replacement demand has arrived,” adding, “Considering sufficient stock price adjustments over the past 10 months, the fourth quarter will be the right time to increase exposure.”

Next year, Samsung Electronics' DRAM and NAND supply is expected to decrease compared to the previous year, with supply contraction larger than anticipated. Due to the Biden administration's restrictions on semiconductor investments in China, investment in the third new NAND line at the Xi'an plant has become virtually impossible, and with foundry investment expansion, there is a shortage of expansion space for DRAM and NAND production lines at the Pyeongtaek plant (P2, P3). In the fourth quarter, Hyundai's DRAM and NAND inventory levels are also low, falling below normal levels. Researcher Kang explained, “Samsung Electronics' DRAM and NAND bit shipments are expected to decrease significantly compared to the previous year, which is expected to have a positive impact on the global semiconductor supply and demand going forward.”

Protectionist semiconductor policies by major countries are likely to lead to supply reductions. Samsung Electronics is evaluated as the only semiconductor company capable of actively responding to global semiconductor protectionist policies, having secured net cash in the 100 trillion KRW range. With semiconductor investments in China virtually impossible, the US, Europe, and Japan are increasing demands for establishing semiconductor factories domestically through strengthened protectionist policies. Researcher Kang stated, “Semiconductor companies, including Samsung Electronics, have no choice but to consider overseas investments through global localization rather than domestic-focused investments, so supply contraction is expected due to cautious investment execution in the future.”

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