Despite the Sharp Drop in Samsung Electronics, "600,000 Won Is Within Reach"... The Basis for the 'Record-Breaking Jackpot' Scenario

KB Securities Maintains Samsung Electronics Target Price at 600,000 Won

"Expanding HBM4 Market Share and Improving Foundry Yields"

Securities analysts predict that Samsung Electronics is on the verge of a simultaneous recovery in both its high bandwidth memory (HBM) and foundry businesses. With the expansion of HBM4 sales boosting its market share and yield improvements in its 2-nanometer (nm) advanced foundry processes restoring competitiveness, the company’s semiconductor business could see its growth prospects broaden. Accordingly, KB Securities has maintained its “Buy” rating on Samsung Electronics, with a target price of 600,000 won.

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HBM4 Sales Expansion... Market Share Nearing 40%

According to KB Securities on September 11, Samsung Electronics’ HBM market share reached 33% in the second quarter of this year, and is expected to approach 40% in the fourth quarter. This is due to third-quarter HBM4 sales forecasted to be more than triple the previous quarter, with HBM4 accounting for over 60% of overall HBM sales in the second half of the year.

Samsung Electronics is ramping up HBM4 mass production while also supplying HBM4E samples to major customers. The company has secured HBM5 architecture incorporating 1c core dies and 2-nm base dies, and has established a detailed roadmap for the next generation product, zHBM.

Notably, zHBM is assessed as a product that addresses heat dissipation issues and increases data transfer bandwidth. Samsung Electronics’ capability to bundle base die, interlayer, packaging, and HBM as an integrated supply—as well as the possibility of providing these through a strategic alliance with TSMC—broadens the range of choices available to customers.

Kim Dongwon, Head of Research at KB Securities, stated, “As the only company capable of offering a turnkey solution spanning from memory components to HBM, foundry, and packaging, the scale of future growth for Samsung Electronics will become even larger.”

2-Nanometer Yield Recovery... Foundry Rebound

Yield improvement in advanced processes has emerged as a key factor in the foundry business. KB Securities estimates that yield for Samsung’s 4-nm foundry production has stabilized above 80%, and 2-nm gate-all-around (GAA) process yield has risen to over 70%. The 2-nm yield has rapidly improved from below 50% at the beginning of the year.

As a result, it is expected that Samsung Electronics’ foundry business will enter full-scale mass production of 4-nm language processing units (LPUs) from the third quarter of this year, and as yields stabilize, a turnaround into profitability is highly likely. KB Securities pointed out that the 4-nm yield is now virtually competitive with TSMC, and that improvement in 2-nm yields could make securing large American customers a visible prospect within the year.

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Improved foundry yields can also impact the HBM business. Enhanced production competitiveness that enables advanced process application to HBM base dies can improve both HBM performance and cost competitiveness. This is why there is analysis suggesting the combined recovery of memory and foundry could significantly boost semiconductor results at Samsung Electronics.

Rising Prices for Custom HBM... Shift in Supply Leadership

The pricing structure of the HBM market may also shift favorably for Samsung Electronics. KB Securities anticipates that as custom HBM—which reflects specifications tailored to each customer—becomes more prevalent, further price increases beyond HBM4 are possible.

With investment in AI data centers on the rise, long-term supply agreements (LTA) between memory suppliers and big tech firms are also increasing. The structural limitation that it takes more than three years to complete and mass-produce new memory production lines, combined with growing long-term demand from U.S. big tech companies such as Google and Amazon, as well as major Chinese companies like Baidu, Alibaba, and Tencent, is cited as a key factor for sustained supply shortages.

Previously, KB Securities also suggested that the memory supply shortage could persist at least until 2028. A rapidly increasing proportion of HBM in Samsung Electronics’ memory business, along with improvement in foundry yields, would highlight its competitive edge as a comprehensive AI semiconductor solution provider, beyond just a memory supplier.

Reevaluation Expected with Enhanced Shareholder Returns

KB Securities also identified the potential for expanded shareholder returns, alongside improved semiconductor performance, as an additional catalyst for further stock appreciation. Possibilities such as share buybacks and retirements, as well as additional cash dividends using residual funds after the third-quarter cash dividend, have been raised. The company also left open the prospect of a new shareholder return policy for 2027–2029 that exceeds 50% of existing free cash flow (FCF).

Ultimately, analysts conclude that the future stock price of Samsung Electronics hinges on whether HBM4 supply expansion translates into actual market share gains and whether advanced foundry yield improvements lead to major customer acquisition and a turnaround to profitability.

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