Samsung Electronics 2Q26 preliminary results in line with expectations; memory price increases remain the key driver

Overview

This report is UBS's review of Samsung Electronics' 2Q26 preliminary results. The company's reported revenue was slightly below UBS's forecast but close to market expectations, while operating profit was broadly in line with UBS and market consensus. The report focuses on confirming that the impact of the employee profit-sharing provision has been incorporated into expectations, while emphasizing that rising memory prices remain the primary source of semiconductor profit growth.

Core views

UBS's core view is positive: first, 2Q26 operating profit was in line with expectations, with no significant negative surprise; second, DRAM and NAND ASP increases were strong, with further upside potential in 3Q26; third, improved semiconductor profits can offset some pressure from non-semiconductor businesses; fourth, although mobile shipments may be slightly better than expected, memory cost pressures will weigh on MX & Networks margins and could widen operating losses in 2H26.

Analysis framework

The report analyzes the results through an initial earnings read-through, segment operating assessment, short-term price and shipment assumptions, valuation multiples, and a 12-month return framework. UBS compares 2Q26 preliminary revenue and operating profit with its own forecasts and Visible Alpha consensus, then further breaks down profit drivers across Memory, Foundry/LSI, mobile, display, consumer electronics, and Harman.

Methodology notes

• Valuation methodsNTM P/BV valuation

  Target price valuation based on forward price-to-book value

  UBS values Samsung Electronics ordinary shares at 3.22x NTM P/BV, assuming long-term ROE of 30.3% and a cost of equity of 9.4%. The GDR target price is derived using an ordinary-share conversion ratio of 25 and the latest exchange rate.

• earnings_reviewpreliminary_results_vs_estimates

  Comparison of preliminary results with forecasts and consensus expectations

  The report compares 2Q26 preliminary revenue of Won171.0tn and operating profit of Won89.4tn with UBS forecasts and market consensus to assess whether the results exceeded or fell short of expectations.

• short_term_factor_assessmentQuantitative Research Review

  Short-term factor questionnaire assessment

  UBS Quantitative Research Review scores industry structure and trends over the past 3 to 6 months at 5, and the next EPS revision relative to consensus at 4. Potential catalysts include improved visibility into end demand, further upside in conventional memory pricing, and progress in HBM certification.

Asset mapping & comparison

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

• Samsung Electronics ordinary shares 005930.KS

  Core covered security

  Strengths

  A global leading electronics group with leading positions in memory semiconductors, LCD/OLED panels, and televisions; reduced competition in the DRAM industry and strong memory ASP growth support profits.

  Weaknesses

  Mobile business margins are pressured by rising memory costs, while Foundry/LSI losses may widen due to the provision.

  Comparison

  2Q26 operating profit was broadly in line with UBS and market expectations, while revenue was slightly below UBS's forecast but close to market consensus.

  Risks

  A downturn in the memory cycle, slowing growth as the smartphone industry matures, a stronger Korean won, Korean market risks, and corporate governance transparency risks.

• Samsung Electronics GDR

  GDR-mapped asset of the same company

  Strengths

  The target price is derived from the ordinary-share target price, a conversion ratio of 25, and the latest exchange rate, benefiting from the same fundamental improvement.

  Weaknesses

  Also affected by exchange rates and GDR conversion factors.

  Comparison

  UBS's GDR target price is US$8,960.

  Risks

  Foreign-exchange volatility, ordinary-share price fluctuations, and cross-market valuation differences.

Key data

• 2Q26 preliminary revenueWon171.0tnUp 28% quarter-on-quarter and 129% year-on-year; slightly below UBS's Won187.7tn forecast but close to Visible Alpha consensus of Won169.4tn.
• 2Q26 preliminary operating profitWon89.4tnUp 56% quarter-on-quarter and 1812% year-on-year; close to UBS's Won91.0tn forecast and market consensus of Won87.3tn.
• 2Q26 DRAM bit growthApproximately 5%UBS estimates this was broadly in line with the previously guided high-single-digit percentage growth.
• 2Q26 NAND bit growthApproximately 2%UBS estimates this was in line with the previously guided low-single-digit percentage growth.
• 2Q26 blended DRAM ASPApproximately +56% quarter-on-quarterIncludes LTA and HBM.
• 2Q26 NAND ASPApproximately +70% quarter-on-quarterStrong pricing trends drove semiconductor operating profit growth.
• 3Q26 DRAM ASP forecast+22% quarter-on-quarterUBS believes further upside remains.
• 3Q26 NAND ASP forecast+30% quarter-on-quarterUBS believes strong memory ASP momentum will continue to drive semiconductor profits.
• 12-month target priceWon550,000For Samsung Electronics ordinary shares; the GDR target price is US$8,960.
• Current priceWon318,000Price date: July 6, 2026.
• Forecast total stock return78.3%Includes 73.0% forecast share price appreciation and a 5.4% forecast dividend yield.

Impact & implications

The key investment implication is that Samsung Electronics' near-term earnings elasticity remains primarily driven by the upcycle in memory and ASP improvement. If DRAM/NAND price increases continue and catalysts such as HBM certification materialize, semiconductor profits are likely to continue expanding; however, investors should also monitor the countervailing pressure from rising memory costs on mobile device margins.

Risks

• The memory and display-panel industries are cyclical, and fluctuations in supply, demand, and capital expenditure may lead to cyclical corrections.
• Although rising DRAM/NAND prices benefit semiconductor profits, they will weigh on mobile business margins and could widen MX & Networks' operating losses in 2H26.
• The smartphone market is maturing, potentially slowing industry revenue growth, while competition remains intense and marketing expenditure requirements are high.
• A stronger Korean won against major currencies could pressure earnings.
• As a major KOSPI constituent, Samsung is indirectly exposed to Korean market and country risks.
• Corporate governance risks include limited transparency in group decision-making and insufficient consideration of shareholder returns.
• UBS discloses potential conflicts of interest arising from investment banking business, holdings, or client relationships involving the company or its affiliates.

What to watch

• The 2Q26 conference call at 10 AM KST on July 30, 2026.
• Whether 3Q26 DRAM and NAND ASPs reach or exceed UBS's forecasts of +22% and +30% quarter-on-quarter, respectively.
• Whether conventional memory prices continue to provide earnings upside.
• Progress in HBM certification.
• Whether visibility into end demand improves.
• Changes in mobile business margins under memory cost pressure.
• Whether Foundry/LSI losses continue to widen.