[Edaily Reporter Kim Kyung-eun ] DaishinSecurities maintained its “Buy” rating and target price of 560,000 won for SamsungElectronics(005930), stating that the company will continue its upward trend driven by a widening supply-demand gap in the memory semiconductor market. The firm analyzed that, with the company’s competitiveness in High-Bandwidth Memory (HBM) also improving, the company is currently in a phase where both market conditions and technological competitiveness are supporting its growth.

Ryu Hyung-geun, an analyst at DaishinSecurities, stated on the 22nd, “Numerous positive changes reflecting strong demand are emerging, which is evidence that the upward cycle is gaining momentum.” He added, “Since it will not be clear until the second half of next year whether the same level of aggressive capacity expansion seen in the past will recur, now is the time to focus on the further expansion of the cycle.”

In particular, he forecast that the gap between supply and demand would widen further as memory semiconductor demand is proving stronger than expected. This is because, during next year’s demand negotiations and the process of securing new and additional long-term contracts, many clients are proposing purchase volumes that exceed expectations. Given the limited expansion of production capacity, it is highly likely that the competition for memory purchases seen in the second half of last year will intensify once again.

Researcher Ryu explained, “At this stage, where production capacity expansion is limited, the intensification of purchasing competition is a development that could raise the upper limit on short-term prices.”

The expansion of long-term contracts was also cited as a factor that would reduce volatility in the memory market and support the upward cycle. It is estimated that SamsungElectronics is securing demand visibility for a total of five years through a “rolling basis” approach, in which contract terms are extended by one year annually. The strategy is to flexibly manage production capacity based on this secured demand to mitigate risks associated with the memory cycle.

DaishinSecurities estimated that discussions regarding supply volumes for 2031 are currently taking shape. Given that some customers are requesting 10-year long-term contracts, the firm judged that Samsung has likely succeeded in extending contracts with certain clients.

The firm also projected that HBM will see improvements not only in sales volume but also in profitability. DaishinSecurities forecast that SamsungElectronics will secure the top market share in the HBM market next year. The analysis suggests that, with relatively low dependence on specific customers, aggressive price-hiking policies are proving effective, leading to increased price competitiveness.

In terms of costs, the yield for 1c DRAM—the next-generation DRAM process—is improving rapidly, with the current front-end process yield estimated at around 80%. Analyst Ryu stated, “We are seeing both pricing advantages and cost improvements occurring simultaneously,” adding, “The value of the HBM business will rise as both quantity and quality improve.”

The possibility of changes to the shareholder return policy was also cited as a factor that could boost the momentum of the stock price. Given that the market reaction to the shareholder return policy announced last August was somewhat lukewarm, market attention is expected to focus on whether the company will proceed with share buybacks and cancellations in the future. DaishinSecurities judged that, as market demands are clear, SamsungElectronics is likely reviewing share buybacks and cancellations more actively.

Assuming that a decision on share buybacks and cancellations has not yet been made, the firm estimated that if the remaining shareholder return funds were distributed entirely as a special dividend, this year’s dividend per share (DPS) would be 13,014 won. The next shareholder return policy is expected to be announced in January of next year.

Analyst Ryu stated, “While past shareholder returns in the memory semiconductor sector were one-off events, we can now expect continuity,” adding, “The reduction in cycle risk based on long-term contracts is the catalyst that can make this a reality.” He further noted, “Expectations for continuous, rather than one-off, shareholder returns can lead to an increase in corporate value.”