[Click eStock] "Samsung Electronics, AI Semiconductor Demand Increase... Target Price Up"

Hyundai Motor Securities maintained its investment opinion of 'Buy' on Samsung Electronics on the 15th and raised the target price from the previous 78,000 KRW to 87,000 KRW.

Samsung Electronics' sales for the second quarter of this year are expected to decrease by 3.5% quarter-on-quarter to 61.5 trillion KRW due to a decline in smartphone shipments, with operating profit projected to be 23.9 billion KRW, which is at the break-even point (BEP) level.

By business division, the deficit in Device Solutions (DS) is expected to decrease to 4 trillion KRW, but the Mobile Experience/Network (MX/NW) division is forecasted to record 2.9 trillion KRW, down 25.8% quarter-on-quarter due to a decrease in Galaxy S23 shipments.

[Image source=Yonhap News]

Meanwhile, as demand for chatbots increases, investment in supercomputers is expanding, significantly improving the earnings outlook for graphics processing unit (GPU) companies such as Nvidia. On the other hand, memory semiconductor prices continue to decline in the second quarter. In particular, the expansion of supercomputer investments by Cloud Service Providers (CSPs) is expected to continue to weaken demand for server DRAM through the third quarter, as budget constraints and rising power costs lead to reduced investment in general servers.

Samsung Electronics is expected to release the Galaxy Z Fold5 and Z Flip5 earlier than in the past this year. Through efficient marketing expenditure, the Z5 series is anticipated to sell 10 million units within the year, contributing to improved MX profitability in the third quarter.

Meanwhile, due to increased foundry demand for Nvidia's 4/5nm AI semiconductors and the effect of Apple's new products, TSMC's utilization rate is expected to recover from the second half of the year. However, the shortage of engineers in advanced processes below 5nm is intensifying, positively impacting Samsung Foundry's expansion of its client base.

Researcher Noh Geun-chang of Hyundai Motor Securities stated, "The recent movement among fabless semiconductor design companies, which previously relied solely on TSMC, to diversify their foundry suppliers is expected to positively affect Samsung Electronics' foundry performance from 2024 onward."

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