"They Said 'Buy Now, Samsung at 4 Million Won and SK hynix at 4.2 Million Won' ... Why Securities Firms Have Suddenly Changed Their Tune"

Brokerages Lower Target Prices for Samsung Electronics and SK hynix


"Growth Rate to Slow in Second Half... Increased Volatility Ahead"

Securities firms, which once referenced the “Samsung Electronics at 4 million won” and “SK hynix at 4.2 million won” as signs of a prolonged semiconductor supercycle, are now lowering their target prices and adjusting their expectations. While demand for high-bandwidth memory (HBM) remains robust due to increased investment in artificial intelligence (AI), a combination of growing supply, weakening demand, aggressive catch-up by Chinese memory semiconductor companies, and potential supply increases around 2027 have raised concerns that the semiconductor peak-out may occur sooner than previously anticipated.

Related reference photo. The Asia Business Daily DB

On the 11th, Yuak Park, a researcher at Kiwoom Securities, released a report lowering the target price for Samsung Electronics from 3.9 million won to 3.5 million won, and for SK hynix from 22 million won to 21 million won. The investment opinion for both stocks remains “Buy.”

Kiwoom Securities, Sharp Downward Revision of Mid- to Long-Term Profit Forecasts

The crux of this adjustment is the change in mid- to long-term earnings forecasts. Park explained, “We reflected adjustments in earnings projections and market interest rates.” Previously, the focus was on the possibility that the memory boom driven by expanded AI investments would continue through 2028. However, in the latest forecast, this year is seen as the peak for earnings growth, with the possibility that profit increases may slow or even decline beginning next year.

The 2027 operating profit forecast for SK hynix was lowered by 15.6%, from 262 trillion won to 221 trillion won. The forecast for 2028 was also revised downward by 22.2%, from 266 trillion won to 207 trillion won.

Samsung Electronics’ long-term projections were also revised significantly downward. The 2027 operating profit estimate was cut from 414 trillion won to 352 trillion won, a decrease of 15.0%. The 2028 estimate dropped by 26.9%, from 439 trillion won to 321 trillion won.

The pace of target price reductions is also notable. Kiwoom Securities lowered its target price for Samsung Electronics from 4.3 million won to 3.9 million won on July 8 and, just over a month later, adjusted it again to 3.5 million won. SK hynix also saw its target price reduced from 26 million won to 22 million won on July 30, and then to 21 million won in less than two weeks.

Supply Growth, Demand Slowdown ... And the Variable of China's Catch-Up

The variable that securities firms are focusing on most is the memory price and supply cycle. As smartphone manufacturers now see the increased price of memory as a burden, it’s likely they will become more conservative in their component purchases. There are also analyses suggesting that demand for notebook and PC memory could be weaker than initially expected at the start of the year.

In addition, if large-scale expansions based on long-term supply contracts materialize, it is projected that growth in the general-purpose memory market supply from 2027 could start to put pressure on the industry. Even if demand remains strong for high-bandwidth memory (HBM) used in AI servers, the simultaneous occurrence of an increase in general-purpose memory supply and a slowdown in demand could mean greater volatility for the overall memory sector.

Related material photo. Photo by Yonhap News

The market penetration by Chinese firms is also seen as a variable. Researcher Park noted that ChangXin Memory Technologies (CXMT) is entering the PC and server markets based on domestically produced equipment, and that Yangtze Memory Technologies (YMTC) is increasing its market share in the mobile and client SSD market by leveraging Chinese-made equipment.

In the case of Samsung Electronics, although there is a possibility of raising its market share in HBM4 and enterprise SSD (eSSD), the expansion of market share by Chinese memory companies at the same time could also lead to increased share price volatility.

In fact, the share price of Samsung Electronics peaked at 374,000 won during intraday trading on June 19, but closed at 239,500 won on the 11th. This marks a decline of about 36% from its peak. SK hynix likewise rose to 2,987,000 won on June 25 during intraday trading, but fell to 1,425,000 won on the 11th, a drop of nearly half from its peak.

Other securities firms have also been lowering their target prices for Samsung Electronics since the end of last month. Mirae Asset Securities cut its target from 5.5 million won to 3.7 million won; Shinhan Securities lowered it from 5.9 million won to 4.5 million won; and Samsung Securities reduced theirs from 5 million won to 4 million won.

From "3.5 Million Won" to "6 Million Won" ... Polarized Outlooks

Still, it is difficult to interpret the recent target price cuts as a consensus in the securities industry toward pessimism about semiconductors. In fact, perspectives on the future results of Samsung Electronics and SK hynix have diverged greatly, resulting in a widening gap in target prices.

On August 10, KB Securities maintained a target price of 6 million won and a “Buy” rating for Samsung Electronics. Dongwon Kim, a researcher at KB Securities, projected third-quarter operating profit for Samsung Electronics at 11.2 trillion won, up 817% year-on-year, forecasting record highs for the fourth consecutive quarter. He also estimated third-quarter operating margins of 83% for DRAM and 71% for NAND.

KB Securities also highlighted the possibility that the memory supply shortage could persist for at least three years, citing that major big tech clients are currently only meeting about 60% of their memory needs and that it takes more than three years to complete new memory fabs. The firm also expects the average selling price of Samsung Electronics’ HBM next year to be more than double this year’s, with an HBM4 market share reaching 44%, giving it the industry’s top spot.

Another variable suggested was the future scale of shareholder returns. KB Securities speculated that Samsung Electronics’ new shareholder returns could range from at least 10 trillion won to as much as 20 trillion won annually, and forecast that the dividend yield based on current prices could exceed 7%.

Views on SK hynix are even more divided. Mirae Asset Securities lowered its target price from 4.2 million won to 2.8 million won on July 29, while Shinhan Securities cut theirs from 4.2 million won to 2.7 million won, a drop of 35.7%. NH Investment & Securities adjusted their target from 4.1 million won to 3.4 million won, Daishin Securities from 3.9 million won to 3.2 million won, and Samsung Securities from 3.5 million won to 3 million won.

By contrast, Korea Investment & Securities raised the target price for SK hynix by 23.7%, from 3.8 million won to 4.7 million won. As a result, the target price for SK hynix now ranges from a low of 2.7 million won to a high of 4.7 million won, a difference of 2 million won depending on the securities firm.

Ultimately, the divergence in outlooks boils down to different judgments about how long AI memory demand will persist, the direction of memory prices, and the real impact of growing supply on market conditions. In the short term, HBM demand may support the earnings and share prices of both companies, but there are concerns that if supply expansion occurs faster than expected, it may become difficult to justify the current share prices’ long-term growth expectations.

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