Nomura is bullish on the continued memory upcycle and expects a clear improvement in pricing in 3Q26 while raising SK Hynix's target price

Overview

This Nomura global memory report focuses on Samsung Electronics, SK Hynix, and the investment impact related to Kioxia. The core view is that in 2Q26F, price pass-through among memory makers differs by supplier, customer, and application, leading to near-term earnings divergence; but entering 3Q26F, stronger pricing will be driven by consumer products, CSP customer DDR5/LPDDR5, and an improved mix of high-ASP HBM4 products. The report also believes that memory long-term agreements (LTAs) will improve earnings visibility, but differences in terms across suppliers and customers will also cause earnings divergence.

Core views

Nomura maintains Buy ratings on Samsung Electronics and SK Hynix. For Samsung Electronics, after the labor agreement set the bonus payout ratio at 10.5%, below the previous 12% assumption, the 2Q26F bonus accrual estimate was reduced from KRW24tn to KRW19tn, lifting the 2Q26F operating profit forecast to KRW76tn; meanwhile, 2026F/2027F operating profit forecasts were raised to KRW371tn/KRW598tn. For SK Hynix, 2Q26F operating profit is about KRW60tn, slightly below expectations, but valuation and disposal gains from the Kioxia investment may exceed KRW60tn, bringing 2Q26F net profit close to KRW100tn; 3Q26F and 2027F benefit from higher memory prices and the M15x capacity ramp-up, and the 2027F operating profit forecast was raised to KRW468tn.

Analysis framework

The report combines top-down industry price cycle analysis with bottom-up company earnings forecasts: it first evaluates quarterly pricing, shipments, customer mix, and LTA terms for DRAM, NAND, and HBM, then maps these to Samsung Electronics' and SK Hynix's operating profit, net profit, ROE, BVPS, and target P/B multiples. On valuation, Samsung Electronics derives its KRW670,000 target price from a 5.0x target P/B multiplied by 12-month forward BVPS; SK Hynix derives its KRW4,700,000 target price from a 6.0x target P/B multiplied by 12-month forward BVPS.

Methodology notes

• equity_valuationtarget_p_b

  target price-to-book valuation

  Samsung Electronics' target price is based on a 5.0x target P/B and 12-month forward BVPS; SK Hynix's target price is based on a 6.0x target P/B and 12-month forward BVPS, with the multiple reflecting improved business stability and cash flow visibility brought by LTAs.

• industry_cycle_analysismemory_pricing_cycle

  memory pricing cycle

  The report assesses earnings elasticity for 2H26F and 2027F through commodity DRAM, NAND, and HBM price increases, customer mix, and contributions from new capacity.

• scenario_monitoringrisk_factor_monitoring

  risk factor tracking

  The report focuses on tracking the impact of U.S. data center construction delays, AI developer concentration, domestic and overseas memory maker capacity expansion, fund positioning, and Korean pension rebalancing on demand, bargaining power, and stock supply-demand.

Asset mapping & comparison

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

• Samsung Electronics (005930.KS)

  Core covered company, benefiting from rising memory prices and bonus accruals lower than expected

  Strengths

  2Q26F price increases are relatively stronger than peers, bonus burden is lower than previously assumed, LTAs improve business stability, and 2026F/2027F operating profit forecasts have been significantly revised upward.

  Weaknesses

  There is pressure in non-memory businesses; the MX hardware business may swing to a loss due to rising memory costs, and Foundry/LSI losses may widen due to bonus expenses.

  Comparison

  Relative to SK Hynix, Samsung Electronics has more diversified business coverage, and memory improvements are partly offset by pressure from non-memory businesses such as smartphones and Foundry/LSI.

  Risks

  Semiconductor tariffs, data center construction delays, slowing AI capex in a high-interest-rate environment, and widening losses in non-memory businesses.

• SK Hynix (000660.KS)

  Core covered company, benefiting from the DRAM/HBM cycle and gains from the Kioxia investment

  Strengths

  Target price raised by 18%, 2027F operating profit forecast revised up to KRW468tn, and the M15x capacity ramp-up and faster pricing improvement in 3Q26F support 2H26F earnings. The Kioxia investment may bring more than KRW60tn in non-operating gains.

  Weaknesses

  In 2Q26F, price increases for some customers and consumer electronics and smartphone-related products were below expectations, resulting in operating profit slightly below the previous forecast.

  Comparison

  Relative to Samsung Electronics, SK Hynix has more concentrated earnings elasticity to memory pricing and the HBM cycle, while the Kioxia investment provides additional net profit catalysts.

  Risks

  LTA terms fall short of expectations, HBM profitability catch-up is slower than expected, uncertainty over subsequent monetization of Kioxia, and slowing AI capex.

• Kioxia (285A.T)

  Source of investment gains for SK Hynix and a target linked to the NAND cycle

  Strengths

  Market capitalization rose from about KRW94tn at the end of March to about KRW483tn currently, significantly enhancing the value of SK Hynix's CB investment; the appendix discloses a target price valuation reference of ¥115,000.

  Weaknesses

  If NAND demand weakens due to slowing AI investment or softer consumer sentiment, the valuation basis will be affected.

  Comparison

  The report treats Kioxia as a key related asset for SK Hynix's investment gains and the NAND cycle, rather than a core covered company in the main report.

  Risks

  Weak NAND demand, worsening competition due to new NAND producers entering the market, FX volatility, component supply risks, and substitution by new technologies.

Key data

• 3Q26F commodity DRAM price forecast+24% q-qPrevious forecast was about +5% q-q, mainly driven by consumer products, CSP DDR5/LPDDR5, and improved HBM4 product mix.
• 3Q26F NAND price forecast+25% q-qBasically unchanged from the previous forecast.
• Samsung Electronics 2Q26F operating profit forecastKRW76tnHigher than the KRW67tn forecast on May 15, mainly due to a lower bonus accrual assumption.
• Samsung Electronics 2026F/2027F operating profit forecastKRW371tn / KRW598tnRaised by 21% and 38%, respectively, versus the May 15 forecast.
• SK Hynix 2Q26F operating profit forecast约KRW60tnSlightly below expectations because price increases for some customers and consumer electronics and smartphone-related products have temporarily lagged.
• SK Hynix 2027F operating profit forecastKRW468tnRaised from KRW394tn, reflecting higher memory prices and revised FX assumptions.
• SK Hynix target priceKRW4,700,000Raised 18% from KRW4,000,000, while maintaining a Buy rating.
• SK Hynix closing priceKRW2,580,000As of June 24, 2026.
• Impact of Kioxia-related gains on SK Hynix2Q26F may exceed KRW60tnIncluding CB valuation gains and gains from disposal of the remaining SPC1 equity interest, which may bring SK Hynix net profit close to KRW100tn.
• Samsung Electronics target priceKRW670,000Raised from KRW590,000 on June 22, and the report maintains this target price and Buy rating.

Impact & implications

If the report's view materializes, the key beneficiaries of the memory upcycle will still be the Korean leaders with high-end DRAM/HBM supply capability, LTA bargaining power, and capital return potential. Stronger 3Q26F pricing and upward revisions to 2027F earnings should support a valuation rerating for Samsung Electronics and SK Hynix; but in the short term, differences in products, customers, and LTA terms will lead to divergence in suppliers' earnings elasticity. The Kioxia investment also provides SK Hynix with significant non-operating gains and potential future monetization options.

Risks

• U.S. data center construction may be delayed by labor shortages, power supply constraints, and social opposition, which could in turn suppress demand in the AI hardware supply chain.
• If competition among AI developers is highly concentrated, the bargaining power of the AI hardware supply chain may weaken.
• Chinese memory makers continue to expand capacity; if localization of equipment accelerates, it may disrupt the commodity memory market in China.
• SEC and SK Hynix shares have risen 7–20x from their 2025 lows, and EM fund weight limits and Korean pension holdings constraints may create selling pressure during rallies.
• Potential U.S. tariffs on semiconductor products and slowing AI capex in a high-interest-rate environment may hinder achievement of the target prices.
• If the pace of HBM price increases and profitability catching up with commodity DRAM falls short of expectations, it may weaken the logic for upward revisions to 2027F earnings.

What to watch

• Whether actual 3Q26F commodity DRAM and NAND price increases approach +24% q-q and +25% q-q.
• The progress, pricing, prepayments, and supplier differences of LTAs signed with customers such as CSPs and Nvidia.
• Samsung Electronics' bonus expenses, the MX business's ability to pass through prices, and changes in Foundry/LSI losses.
• SK Hynix's M15x capacity ramp-up, HBM price negotiations, and follow-up monetization plans for Kioxia CB holdings.
• Progress of U.S. data center construction, power constraints, and changes in overseas sovereign AI investment.
• The pace of capacity expansion by Chinese memory makers, progress in localization of equipment, and changes in U.S. regulatory policy.
• Improvements in supply-demand from share buybacks, cancellations, and treasury share purchases related to employee compensation by Samsung Electronics and SK Hynix.