Memory Chip Volume and Price Surge Drives Bank of America's Broad Upgrade of Korean and Taiwanese Stock Targets

Overview

This report analyzes the latest developments in the global semiconductor memory industry. The core thesis is that the sector is in a strong upcycle driven by AI. Due to sharp increases in DRAM and NAND prices and record-breaking April sales data, BoA holds a highly optimistic view of earnings prospects for major memory chip manufacturers and equipment suppliers. We have comprehensively upgraded target prices for seven covered companies (Samsung Electronics, SK Hynix, Nanya Tech, Phison Electronics, Wonik IPS, Hanmi Semi, ASMPT) by 10%-19%. Despite recent share price rebounds, valuations remain below historical averages, with high certainty of earnings growth over the next two years, thus maintaining our Buy rating.

Core views

Supply-demand imbalance driving price surge: BoA notes that April sales data from Taiwanese memory firms were staggering, with Nanya reporting a 717% YoY increase and Phison a 237% rise; South Korea's semiconductor exports grew 173% YoY. This强劲 performance is primarily driven by DRAM and NAND average selling prices (ASP) increasing 40-50% sequentially, far surpassing the previously expected 30%. With wafer capacity constrained and chip order outlooks optimistic for 2027-2028, sentiment among memory chip manufacturers has turned positive. Earnings forecasts and target price upgrades: Based on higher ASP assumptions (up 5-10%) and stronger revenue expectations, BoA revised its EPS forecasts for 2026-2028 upwards by more than 10%. Consequently, Samsung's new target price is set at KRW 370,000 (+19%), SK Hynix at KRW 2,100,000 (+17%), Nanya at TWD 440 (+10%), and Phison at TWD 3500 (+17%). BoA believes these target prices imply 30-50% upside potential for stock prices. Valuation re-rating potential: While share prices have rebounded recently, trailing P/E ratios for major memory stocks are still low. Samsung's target P/E is 10x (2026-27E), SK Hynix 8x, Nanya 8x, all significantly below their long-term historical averages (typically 12-13x). BoA expects that as profits improve markedly in 2026 and the AI theme continues, markets will re-rate these equities. Equipment suppliers benefit lag but are certain: As profitability improves for memory makers, capital expenditure will become more active starting from 2028 new wafer fab constructions, particularly for HBM capacity expansions through advanced packaging (TCB). ASMPT and Hanmi Semi will directly benefit from HBM capacity expansions post-2028. Although Wonik IPS also faces an inflection point in earnings, it faces competition globally and thus gets a valuation discount.

Analysis framework

BoA employs a top-down and bottom-up approach. First, using high-frequency data such as monthly sales, export figures, and spot prices, we construct the 'BoA Memory Index' to gauge turning points in industry cycles. Second, by dissecting supply-demand dynamics for DRAM and NAND, we revise ASP and margin assumptions to adjust EPS forecasts. Finally, combining historical valuation multiples (P/E Band) with future earnings growth certainty, we provide target prices. Importantly, we emphasize the trend of hyperscalers’ capital expenditures (Amazon, Microsoft, Google, Meta) within the AI ecosystem as validation for sustained long-term demand.

Methodology notes

• Industry/Industrial Analysis FrameworkSupply-demand framework

  Core Drivers of Storage Chip Cycles

  The storage industry is typically cyclical, with prices determined by supply (wafer capacity, technology transitions) and demand (data centers, consumer electronics). This report tracks changes in ASP and capacity utilization to determine if the current phase represents a price surge due to insufficient supply.

• Valuation MethodPE/PEG valuation

  Valuation Anchor for Cyclical Stocks

  For cyclical stocks, a lower P/E ratio is often applied during peak profit periods to reflect concerns about future declines, or PEG ratios are used in growth phases. By comparing current P/E ratios to historical averages while factoring in EPS growth expectations, this report assesses whether valuations are reasonable and if there's room for re-rating.

• Industry/Industrial Analysis FrameworkUpstream-Midstream-Downstream Supply Chain Transmission

  Capital Expenditure Transmission Effect

  When upstream memory chip manufacturers see improved profitability, they increase capital expenditures (capex), benefiting midstream equipment manufacturers like ASMPT and Hanmi Semi. By analyzing profitability turning points for chip makers, this report anticipates when equipment orders will be released (mainly in 2028).

Asset mapping & comparison

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

• Samsung Electronics (005930 KS)

  Global leader in memory, benefiting from rising DRAM/NAND prices and HBM positioning

  Strengths

  Scale advantage, optimistic outlook for HBM4, higher exposure to traditional DRAM

  Weaknesses

  QoQ operating profit growth might face constraints after Q2 2026

  Comparison

  Lowest valuation (10x P/E), significant re-rating potential

• SK Hynix (000660 KS)

  HBM leader, directly benefiting from AI server demand

  Strengths

  Dominance in HBM3e/4, high profit margins

  Comparison

  Slightly higher valuation than Samsung (8x P/E), but with stronger growth certainty

• Nanya Tech (2408 TT)

  Representative of Taiwan's DRAM sector, high elasticity

  Strengths

  Record sales, strong momentum in ASP

  Weaknesses

  2027 EPS growth may slow down due to high base effect in 2026

  Comparison

  Lower valuation (8x P/E), implied 40% upside potential

• Phison Electronics (8299 TT)

  Supplier of NAND controllers and modules, benefiting from the AI ecosystem

  Strengths

  Record-high gross margin (36%), increased proportion of AI solutions (e.g., eSSDs)

  Weaknesses

  Reduced valuation to 23x P/E

  Comparison

  Higher profitability compared to Wonik IPS

• ASMPT (522 HK)

  Advanced packaging equipment supplier, benefiting from HBM capacity expansion

  Strengths

  Growth in TCB orders, high visibility of long-term contracts

  Weaknesses

  Competitive pressure for market share in Korea and Europe

  Comparison

  35x P/E valuation reflects peak profits around 2028

  Risks

  Loss of market share

Key data

• Nanya's YoY Sales Growth in April+717%Record growth reflecting surging DRAM prices
• Phison's YoY Sales Growth in April+237%Strong demand for NAND storage products
• YoY Growth Rate of South Korea's Semiconductor Exports in April+173%Significant overall industry recovery
• Quarter-over-Quater Increase in DRAM/NAND ASP40-50%Far exceeds market consensus of 30%
• Peak Value of BoA's Memory Indicator180+Well above the previous peak of 140, setting a new record high
• New Target Price for Samsung Electronics370,000 KRW19% increase, based on a 10x P/E multiple for 2026-27E
• New Target Price for SK Hynix2,100,000 KRW17% increase, based on an 8x P/E multiple for 2026-27E

Impact & implications

The report argues that the robust performance in the memory sector extends beyond short-term price fluctuations and is fundamentally structural, driven by AI. For investors, the current low valuations of memory stocks offer significant safety margins and upside potential. Equipment suppliers may see limited benefits in 2026-2027 but could experience substantial order inflows from HBM capacity expansions after 2028. Furthermore, ongoing massive capex by hyperscalers (projected to grow over 60% in 2026) provides strong backing for sustained memory demand.

Risks

• Risk of decline in spot prices for DRAM/NAND
• Underperformance of Hyperscalers' capital expenditures
• Intensifying competition for market share among equipment suppliers
• Macroeconomic downturn leading to weak consumer demand

What to watch

• Subsequent month trends in spot and contract prices for DRAM and NAND
• Continuity of South Korea's semiconductor export data
• 2026-2027 capital expenditure plans from major memory producers
• Production progress and adoption rate of HBM4 technology