Goldman Sachs reiterates Buy on Samsung Electronics: the memory cycle, HBM pricing, and LTAs are the core supports

Overview

This report is Goldman Sachs' summary following its Korea memory expert webinar on July 28, 2026, combined with its investment view and valuation methodology for Samsung Electronics. The core conclusion is that memory supply and demand remain tight, conventional DRAM prices are likely to continue strong growth this year, HBM prices have greater upside next year, and the binding terms in LTAs will improve visibility on orders and pricing. Goldman Sachs therefore reiterates its Buy rating on Samsung Electronics.

Core views

First, conventional DRAM prices may see strong double-digit quarter-on-quarter growth in 3Q 2026, and may continue to rise at a double-digit quarter-on-quarter pace in 4Q amid supply shortages. Second, HBM pricing may rise significantly next year due to higher conventional DRAM prices, and Goldman Sachs expects Samsung Electronics' HBM prices to increase 87% year-on-year. Third, LTA terms including prepayments, take-or-pay, and cancellation penalties strengthen contractual binding, and more than half of server DRAM is already covered by LTAs. Fourth, Chinese suppliers are actively expanding capacity, but gaps in yield, technology, and reliability mean they are unlikely to become a significant threat in the near to medium term. Fifth, capacity additions may be stronger than historical levels, but HBM's high trade ratio will constrain bit growth.

Analysis framework

The report primarily combines expert interview takeaways, industry supply-demand analysis, product pricing trends, LTA contract structure analysis, and company valuation methodology. Samsung Electronics' target price is based on a 12-month 2026-2027 EV/EBITDA SOTP methodology; the preference share target price is based on a 25% discount to the common shares.

Methodology notes

• Valuation methodsEV/EBITDA SOTP

  12-month 2026-2027E EV/EBITDA sum-of-the-parts valuation

  Goldman Sachs uses 2026-2027E EV/EBITDA as the basis for its SOTP valuation, deriving a 12-month target price of W480,000 for Samsung Electronics common shares.

• Valuation methodsPreference share discount

  Preference share discount relative to common shares

  The preference share target price is W360,000, based on a 25% discount of preference shares to common shares, derived from the average of a two-factor model discount and the average discount over the past month.

• factorGS Factor Profile

  Factor profile across Growth, Financial Returns, Multiple, and Integrated

  The Goldman Sachs Factor Profile compares a stock's relative attributes versus the market and industry peers across growth, financial returns, valuation multiples, and integrated indicators.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Samsung Electronics (005930.KS)

  Core covered company, benefiting from the DRAM, HBM, and memory pricing cycle

  Strengths

  A global large-cap technology company with leading market share across memory chips, OLED panels, smartphones, TVs, and other products; strong memory profitability, improving HBM progress, and LTAs that provide stronger order binding.

  Weaknesses

  HBM's high trade ratio may constrain bit growth; mass-production yield for hybrid bonding still needs time.

  Comparison

  Compared with potential Chinese memory suppliers, Samsung Electronics still maintains leading advantages in yield, technology level, and product reliability.

  Risks

  Significant deterioration in memory supply-demand, sharp contraction in smartphone margins, and loss of mobile OLED market share.

• Samsung Electronics (Pref) (005935.KS)

  Preference shares of the same company, valued based on a discount relative to common shares

  Strengths

  Also benefits from the company's memory cycle and earnings improvement, with the target price derived using a discount to the common share target price.

  Weaknesses

  Price performance is affected by changes in the preference-share discount relative to common shares.

  Comparison

  Target price of W360,000, corresponding to a 25% discount to the common share target price of W480,000.

  Risks

  Shares the company's fundamental risks with the common shares, while also being affected by volatility in the preference-share discount.

• SK Hynix Inc.

  Peer in the Korea memory coverage universe

  Strengths

  In the same memory industry cycle and may likewise benefit from rising DRAM/HBM prices.

  Weaknesses

  The report does not provide a separate rating, target price, or detailed financial view for this company.

  Comparison

  Used as a peer in Samsung Electronics' coverage universe for relative rating context.

  Risks

  Also faces risks from memory supply-demand dynamics and technological iteration.

Key data

• Common share target priceW480,000Based on 12-month 2026-2027E EV/EBITDA SOTP.
• Preference share target priceW360,000Based on a 25% discount relative to common shares.
• Common share ratingBuyGoldman Sachs reiterates its Buy rating on Samsung Electronics.
• DRAM pricingMay see double-digit quarter-on-quarter growth in 3Q 2026, and may continue double-digit quarter-on-quarter growth in 4QFrom the Korea memory expert call view.
• HBM price forecastSamsung Electronics HBM price +87% YoY next yearAbove the Bloomberg sell-side consensus expectation of +52%.
• Server DRAM LTA coverageMore than halfExperts expect LTA coverage to continue increasing in the future.
• Key downside risksDeterioration in memory supply-demand, sharp contraction in smartphone margins, loss of mobile OLED market shareFrom the report's risk disclosure.

Impact & implications

If the expert view plays out, Samsung Electronics' earnings elasticity will mainly come from continued increases in memory prices, better-than-expected HBM pricing, and LTAs improving order visibility. For investors, the report reinforces Samsung Electronics' positioning as a beneficiary of the upcycle in Korea semiconductors and memory, while also highlighting that a reversal in supply-demand dynamics and margin pressure in non-memory businesses remain the key risks.

Risks

• A sharp deterioration in memory supply-demand.
• A sharp contraction in smartphone margins.
• Loss of market share in mobile OLED.
• HBM or hybrid bonding technology adoption progress and mass-production yields coming in below expectations.
• If Chinese memory suppliers narrow the gaps in yield, technology, and reliability, competitive pressure could increase.

What to watch

• The quarter-on-quarter trend in DRAM contract prices and spot prices in 3Q and 4Q 2026.
• Whether HBM prices next year come close to Goldman Sachs' forecast of +87% YoY.
• The coverage of server DRAM LTAs and the enforcement strength of prepayment, take-or-pay, and cancellation penalty clauses.
• Progress in Samsung Electronics' HBM customer adoption, yield improvement, and capacity expansion.
• Changes in yield, technology level, and product reliability after Chinese memory suppliers expand capacity.
• Whether memory bit growth falls below the historical average due to HBM's high trade ratio.