[Click eStock] Samsung Electronics, DRAM Bottoms Out 'Semiconductor Profit Turnaround in Q4'

On the 21st, KB Securities maintained its buy rating and target price of 95,000 KRW for Samsung Electronics. This is because the semiconductor (DS) division of Samsung Electronics is expected to return to profitability in the fourth quarter for the first time in a year since Q4 2022.

Dongwon Kim, a researcher at KB Securities, stated, “From the third quarter, the average selling price (ASP) of DRAM is expected to turn upward for the first time in seven quarters since Q3 2021, due to increased shipments of high-value new products (HBM3, DDR5) and the supply reduction effect caused by production cuts.” He added, “Although the average selling price of NAND, which has high price elasticity to demand, is inevitably expected to continue declining, the slowdown in price drops is expected to reduce losses.” He emphasized, “In the second half of the year, the memory semiconductor market is expected to see profitability improvement driven by expanded shipments of high-value new products such as HBM3 and DDR5.”

Samsung Electronics is expected to start supplying HBM3 to two US artificial intelligence (AI) graphics processing unit (GPU) companies from the fourth quarter of this year. This is because US AI GPU companies are pursuing diversification of suppliers considering the shortage of HBM supply.

Researcher Kim analyzed, “Samsung Electronics will establish a mass production system for the 4th and 5th generation products, HBM3 and HBMP, and start supply by Q4 this year, and is expected to begin mass production of the 6th generation HBM from next year.” He added, “Accordingly, the proportion of HBM sales in Samsung Electronics’ total DRAM sales is expected to expand from 6% in 2023 to 18% in 2024.”

He further evaluated, “In particular, the price of HBM3 installed in AI servers is 6 to 7 times higher than existing memory semiconductors, and the AI server market is expected to grow at an average annual rate of 25% over the next five years (compared to 5% average annual growth for existing servers), which is expected to act as a mid- to long-term profitability improvement factor for Samsung Electronics’ DRAM business.”

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