Samsung Electronics memory upcycle and HBM4 confidence continue; Goldman Sachs reiterates Buy
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Samsung Electronics memory upcycle and HBM4 confidence continue; Goldman Sachs reiterates Buy
Goldman Sachs believes Samsung Electronics' DRAM supply-demand balance, HBM4 progress, and LTA pricing structure still support earnings upside, and maintains 12-month target prices of W320,000 for common shares and W245,000 for preferred shares.
- The company reiterates a positive outlook for memory supply-demand and pricing, expects the shortage to continue this year and possibly intensify next year, and sees regular DRAM prices rising in 2H26.
- The LTA contract floor price is expected to be meaningfully higher than prior contracts, with stronger customer interest in longer-term agreements, which could improve the sustainability of medium- to long-term margins.
- The company reiterates its expectation that HBM4 will reach the crossover point in 3Q26, that about half of HBM sales will come from HBM4, and it remains confident in its position as a key high-end HBM4 supplier.
- A large portion of P4 clean-room capacity is being allocated to 1c-based HBM4 and HBM4E, which could limit additional wafer capacity for conventional memory and further tighten the conventional memory shortage.
- Goldman Sachs expects Samsung Electronics' memory capex to rise 28% year over year to W52tn in 2026, and Foundry capex to rise 129% year over year to W16tn.
Report interpretation
Overview
This is a Samsung Electronics company research note published by Goldman Sachs after the Asia Communacopia + Technology conference. The report centers on the key feedback from the investor virtual meeting, focusing on memory supply-demand, DRAM pricing, LTA contracts, HBM4, P4 capacity allocation, and capital expenditure. Goldman Sachs keeps a constructive view on Samsung Electronics and reiterates its Buy rating.
Core views
The report's core view is that Samsung Electronics remains in an earnings upcycle driven by its memory business. The company expects industry DRAM supply growth to lag DRAM bit demand growth, with the memory shortage continuing this year and potentially worsening next year; the LTA contract structure is more favorable for stabilizing medium- to long-term margins; HBM4 progress improves pricing power for high-end products; and P4 capacity tilted toward HBM4 and HBM4E may further squeeze conventional memory supply.
Analysis framework
Goldman Sachs combines the company's management meeting takeaways with its own industry supply-demand and pricing forecasts to assess memory prices, HBM product mix, capex, and target valuation. The valuation uses a 12-month 2026E EV/EBITDA-based SOTP approach, with separate target prices for common and preferred shares.
Methodology notes
12-month 2026E EV/EBITDA-based SOTP target price
The common share target price is W320,000; the preferred share target price is W245,000, based on a 23% target discount to common shares.
Growth, financial returns, valuation multiples, and composite factor
Goldman Sachs compares individual stocks with the market and industry peers using growth, financial returns, valuation multiples, and composite scores to provide investment context.
M&A Rank 3
M&A Rank 3 indicates a low probability of being an acquisition target and is usually not included in the target price components.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- Samsung Electronics common shares 005930.KSCore coverage name
- Strengths
- A global leading technology company with leading shares in multiple products, including memory chips, OLED panels, smartphones, and televisions; rising memory prices, HBM4 progress, and more disciplined LTA contracts are expected to support earnings.
- Weaknesses
- Capex is rising rapidly, and the business is still affected by the memory cycle, smartphone margins, and display panel competition.
- Comparison
- Rated relative to Hansol Chemical, LG Display, LG Electronics, LG Innotek, SK Hynix, SKC, and Samsung Electro-Mechanics in the coverage universe.
- Risks
- A sharp deterioration in memory supply-demand, a steep decline in smartphone margins, and loss of mobile OLED share.
- Samsung Electronics preferred shares 005935.KSInvestment vehicle for the same company via preferred shares
- Strengths
- Target price W245,000, disclosed upside of 30.5%, with the target price based on a 23% discount to common shares.
- Weaknesses
- Assumes a discount relative to common shares; returns depend on discount convergence, company fundamentals, and shareholder return expectations.
- Comparison
- Also rated Buy alongside the common shares, but valued using a preferred-vs-common discount framework.
- Risks
- Risks from the common shares' fundamentals, widening preferred-share discounts, and changes in market liquidity and risk appetite.
Key data
- Common share target priceW320,00012-month 2026E EV/EBITDA-based SOTP target price.
- Preferred share target priceW245,000Based on a 23% target discount to common shares.
- Implied upside for common shares6.8%Upside shown on the disclosure page.
- Implied upside for preferred shares30.5%Upside shown on the disclosure page.
- Expected industry DRAM bit demand growth in 202625%Goldman Sachs expects industry DRAM bit demand growth of 25% this year.
- Expected regular DRAM price growth in 3Q26Low double-digit % QoQ growthGoldman Sachs forecasts low double-digit percentage QoQ growth in regular DRAM prices for 3Q26.
- Expected regular DRAM price growth in 4Q26Mid- to high single-digit % QoQ growthGoldman Sachs forecasts mid- to high single-digit percentage QoQ growth in regular DRAM prices for 4Q26.
- Expected memory capex in 2026W52tn, up 28% YoYMainly for DRAM/HBM, as well as P4 clean rooms and P5 groundbreaking.
- Expected Foundry capex in 2026W16tn, up 129% YoYMainly for the Taylor fab; management previously said Taylor fab 2nm mass production will begin in 2027.
- HBM pricing outlookMid-teens % YoY growth next yearGoldman Sachs expects HBM prices to grow by mid-teens percentage year over year next year, with significant upside potential.
Impact & implications
If the expected memory shortage, HBM4 progress, and LTA pricing materialize as anticipated, Samsung Electronics' profitability and valuation support could strengthen; meanwhile, a P4 capacity tilt toward HBM could make conventional DRAM supply tighter and further extend the price cycle. The report is constructive on both South Korean technology and the global memory supply chain, especially benefiting memory prices, the HBM supply chain, and manufacturers with advanced process and packaging capabilities.
Risks
- A significant deterioration in memory supply-demand.
- A sharp decline in smartphone margins.
- Loss of mobile OLED market share.
- High capex may depress free cash flow and investment returns if it does not translate into revenue and profit growth.
- HBM4 supplier position, product yields, or pricing premium lower than expected.
What to watch
- Whether regular DRAM prices rise in 2H26 as expected.
- LTA signing volume, tenor, floor price, and customer lock-in.
- Whether the HBM4 crossover point in 3Q26 is achieved and HBM4's share of HBM sales.
- The actual impact of P4 clean-room capacity allocation on HBM and conventional DRAM supply.
- The execution pace of the W52tn memory capex and W16tn Foundry capex in 2026.
- The progress of 2nm mass production at Taylor fab in 2027.
- Whether Samsung Electronics' shareholder return policy becomes more clearly enhanced.