[Edaily Reporter Kim Kyung-eun] Opinions have been raised that the IPO of Chinese DRAM manufacturer Changxin Memory Technologies (CXMT) will be an opportunity rather than a threat to #Samsung Electronics. Analysts suggest that the technological gap will actually serve to highlight Samsung Electronics’ competitive edge.

Kim Dong-won, Head of Research at KB Securities, stated in a report on the 10th, “The CXMT IPO is not a threat to Samsung Electronics but is expected to serve as a powerful catalyst for reevaluating the premium it commands as the world’s leading memory manufacturer.”

KB Securities maintained its target price of 530,000 won for Samsung Electronics and its “Buy” investment rating. The firm explained that Samsung Electronics’ current stock price, trading at a forward 12-month price-to-earnings (P/E) ratio of just 5.9, does not fully reflect the pace of future earnings improvement or its dominance in the high-value-added memory market.

Head Kim “While the listing of China’s CXMT could fuel concerns about intensifying competition, it is actually expected to serve as an opportunity to re-examine the technological competitiveness and market dominance of the three global DRAM leaders—Samsung Electronics, SK Hynix, and Micron,” he said. “In particular, even if CXMT secures funding, it appears virtually impossible for it to disrupt the landscape of the high-performance server DRAM market—including HBM, DDR5, and LPDDR5—due to the technology gap and differences in customer structure.”

He explained, “CXMT is expected to command a high enterprise value during its IPO, driven by the Chinese government’s semiconductor localization policy, massive capital investment, and the expansion of its customer base within China.” However, he noted, “CXMT’s HBM, DDR5, and LPDDR5 products are based on legacy process technologies, resulting in a significant technological gap compared to Samsung Electronics in terms of net die competitiveness and performance.”

He continued, “In terms of speed, power efficiency, and Big Tech certifications, there are clear limitations in meeting the demand for memory optimized for AI servers and high-performance computing.” He emphasized, “While CXMT’s IPO could act as a competitive variable for Taiwanese DRAM manufacturers, it is expected to trigger a re-evaluation of Samsung Electronics by highlighting the company’s differentiated technological capabilities, customer base, and potential for structural profit improvement in the high-performance AI memory market.”

Samsung Electronics’ second-quarter operating profit is estimated at 90 trillion won, a 19-fold increase year-over-year, with an operating margin of 51%.

Kim noted, “As of June, the fulfillment rate for customers’ memory demand is only around 50%, indicating that the supply shortage is intensifying,” and predicted, “The rate of increase in DRAM and NAND prices in the second quarter is expected to reach 60% each, significantly exceeding market consensus.” He added, “Starting in the third quarter, we expect to achieve quarterly operating profit of over 100 trillion won thanks to expanded shipments of high-value-added memory.”