[E-Daily Reporter Shin Ha-yeon ] On the 30th, NH INVESTMENT & SECURITIES assessed that, as structural changes are underway in the memory semiconductor industry, the likelihood of a sharp downturn in business conditions similar to those seen in the past is limited SamsungElectronics(005930). With the memory supply shortage expected to persist through 2028, the firm forecasts that an expansion of long-term supply contracts and increased sales of High-Bandwidth Memory (HBM) will support earnings growth. It maintained its “Buy” investment rating and a target price of 530,000 won.

Ryu Young-ho, an analyst at NH INVESTMENT & SECURITIES, stated in a report released that day, “The memory industry is undergoing structural changes unlike those of the past,” adding, “We need to carefully consider these structural changes in the memory industry.”

SamsungElectronics’ third-quarter revenue this year reached 195.3 trillion won, a 126.9% increase compared to the same period last year. Operating profit rose 783.1% to 107.44 trillion won. Price increases driven by expanded sales of HBM4 and server memory led to the improvement in earnings.

By business division, the Semiconductor (DS) division recorded an operating profit of 106.5 trillion won, driving the company’s overall performance. Despite cost pressures, the Mobile Experience (MX) and Network divisions limited their losses to around 600 billion won thanks to rising average selling prices (ASPs) resulting from an increased share of flagship products, such as foldable phones. Samsung Display (SDC) and Harman posted operating profits of 1.1 trillion won and 600 billion won, respectively.

NH INVESTMENT & SECURITIES highlighted changes in the supply-demand structure of the memory industry. SamsungElectronics expects the memory supply shortage to persist through 2028. The firm explained that even if industry capital expenditures increase next year, it will take time for this to translate into actual production growth, as funds will be allocated to securing new factory sites, construction, and equipment procurement. The increasing die area and process complexity of HBM4E and HBM5 are also factors constraining supply expansion.

The expansion of long-term supply agreements (LTAs) was also cited as a change from the past. SamsungElectronics has currently signed long-term supply agreements with 10 major customers and is in negotiations with an additional 10 key customers. Its customer base is also expanding beyond existing hyperscalers and server manufacturers to include the mobile, automotive, and networking sectors.

The company aims to secure 60–70% of its total production capacity through multi-year contracts by 2030. While enhancing supply stability by extending contract terms annually, the company is reviewing measures to address additional supply requests from some customers due to a shortage of available production capacity.

Regarding capital expenditures, Analyst Ryu stated, “After securing the necessary infrastructure, we plan to respond flexibly based on market conditions,” adding, “This will help limit sharp downturns like those seen in the past.”

The HBM business is also showing positive results. SamsungElectronics’ third-quarter HBM4 revenue more than tripled compared to the previous quarter, accounting for approximately 60% of total HBM revenue. The company also achieved its second-half goal of securing an HBM market share equivalent to its overall DRAM market share in the third quarter.

The company expects the upward trend in earnings to accelerate further in the fourth quarter. NH INVESTMENT & SECURITIES projected SamsungElectronics’ fourth-quarter revenue at 213.8 trillion won and operating profit at 129.3 trillion won. These figures represent year-over-year increases of 127.9% and 544.3%, respectively, and are expected to mark record-high earnings.

In particular, the firm estimated that fourth-quarter DRAM and NAND flash shipments would increase by 17.7% and 14.9%, respectively, compared to the previous quarter, while average selling prices would rise by 9.0% and 8.9%, respectively. However, it predicted that the MX division’s losses would widen due to rising cost pressures.

Analyst Ryu noted, “Even assuming conservative exchange rates for the fourth quarter, there is a possibility that earnings forecasts could be revised upward, given the higher-than-expected shipment volumes and the positive memory market environment.”

The shareholder return policy is another factor that could influence future stock prices. Although the policy announced this time fell short of market expectations, analysts expect a clearer direction to be presented during the fourth-quarter earnings announcement, as the existing three-year plan concludes this year.

NH INVESTMENT & SECURITIES projected SamsungElectronics’ annual operating profit at 383.5 trillion won for this year and 571 trillion won for next year.