[Click eStock] "Samsung Electronics Expected to Benefit from US Semiconductor Law... Stock Price Lows to Rise"

[Asia Economy Reporter Lee Jung-yoon] KB Securities maintained a buy rating and a target price of 75,000 KRW on Samsung Electronics on the 25th, anticipating benefits from the U.S. Semiconductor Act.

If the U.S. Semiconductor Support Act passes, Samsung Electronics is expected to gain mid- to long-term benefits from localizing production bases through various incentives, thereby expanding its customer base. The Semiconductor Support Act aims to provide $52 billion (approximately 68 trillion KRW) in subsidies and incentives for production facility investments to bolster the U.S. semiconductor manufacturing capabilities. Congressional approval of the U.S. Semiconductor Support Act is expected as early as the end of July, and after the bill passes, Samsung Electronics is projected to begin construction of a new foundry plant worth $17 billion (about 22 trillion KRW) in Taylor, Texas, in the second half of this year.

KB Securities noted that for large-scale investments to materialize in the long term, Samsung Electronics would need to consider the U.S. as a second semiconductor production hub in addition to its domestic Pyeongtaek semiconductor plant. This depends on the scale and expansion of subsidies in the future. Researcher Kim Dong-won of KB Securities explained, "According to foreign media reports on the 21st, Samsung Electronics is expected to invest 250 trillion KRW over the next 20 years to establish a total of 11 semiconductor production plants in Texas," adding, "However, this figure appears to be an arithmetic calculation assuming that all factories will be built on the total land secured in Texas as stated in Samsung Electronics' tax incentive application submitted to the state of Texas."

Despite expected earnings slowdown due to an average quarterly price decline of around 10% for DRAM and NAND in the second half of this year, Samsung Electronics' stock price is expected to see gradually higher lows toward the end of the year. This is because global semiconductor companies' memory inventories are expected to peak in the first half of next year, prompting long-term investors to begin investing with consideration of the six-month price lead time typical of semiconductor companies. Additionally, the global production shipment growth rate of the top three DRAM companies in 2023 is estimated to be around 15%, and the limited supply increase is expected to reduce volatility in the memory semiconductor cycle, positively affecting supply and demand.

Researcher Kim said, "The reduction in memory semiconductor supply next year is expected to significantly alleviate concerns about a semiconductor cycle hard landing similar to that in 2019."

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