[Edaily Reporter Kim Kyung-eun ] Forecasts indicate that SamsungElectronics(005930)and SK hynix(000660)will post earnings in the third quarter of this year that exceed market expectations. Analysts predict that despite the strong won, both companies will post solid earnings as prices and shipment volumes rise in tandem due to a shortage of memory semiconductors.

Ryu Hyung-geun, an analyst at DaishinSecurities, stated in a report on the 7th, “We expect South Korean semiconductor companies’ third-quarter earnings to be stronger than feared,” adding, “Efficient pricing strategies that capitalized on the extreme supply-demand imbalance are likely to have proven effective.”

DaishinSecurities raised its third-quarter operating profit forecast for SamsungElectronics from 106 trillion won to 110 trillion won and for SK hynix from 74 trillion won to 78 trillion won. The firm explained that while the decline in the won-dollar exchange rate during the third quarter weighed on earnings, rising memory prices and increased shipments offset this impact.

The firm projected SamsungElectronics’ third-quarter revenue at 195.647 trillion won and operating profit at 110.621 trillion won. Operating profit for the semiconductor (DS) division was estimated at 110.692 trillion won. The average selling price (ASP) for DRAM is estimated to have risen 21% quarter-over-quarter, while NAND ASPs are estimated to have risen 20%. DRAM shipments are also estimated to have increased by 3% over the same period.

SK hynix is also expected to see its earnings boosted by rising prices. Third-quarter revenue is estimated at 98.551 trillion won, with operating profit at 78.108 trillion won. DRAM ASPs are expected to have risen 28% quarter-over-quarter, while NAND ASPs are projected to have increased by 18%. DRAM shipments are also estimated to have grown by 10%. Accordingly, the operating profit margin is forecast to reach 79%.

Combined third-quarter memory semiconductor revenue for SamsungElectronics and SK hynix is estimated to have exceeded $170 billion for the first time ever. This is attributed to the deepening memory supply shortage, which has led customers to prioritize securing supply over price.

The upward trend in earnings is expected to continue into the fourth quarter. DaishinSecurities projected that server DRAM prices would rise by around 15% quarter-over-quarter in the fourth quarter, and that mobile DRAM prices in the first quarter of next year could exceed market expectations. While capital expenditures are expanding, the firm believes the likelihood of a significant short-term increase in supply is limited due to the time lag between investment and actual production growth.

Analyst Ryu stated, “Customers are prioritizing securing supply over immediate cost burdens,” adding, “There is a sense that the intensified purchasing competition experienced in the second half of last year is reemerging.” He continued, “We also need to raise our expectations for short-term prices.”

DaishinSecurities maintained its “Overweight” rating on the semiconductor sector. It also maintained its “Buy” ratings on SamsungElectronics and SK hynix, with target prices of 560,000 won and 3.2 million won, respectively.