Goldman Sachs reiterates Buy on Samsung Electronics; Korean memory experts’ call reinforces the DRAM and HBM pricing-upside thesis

Overview

Goldman Sachs published key takeaways following a Korean memory experts’ virtual conference on July 28. The core conclusion is that conditions in the Korean memory industry remain strong. Experts believe traditional DRAM prices will continue rising robustly in 2H26, HBM prices have significant upside potential next year, and LTA mechanisms will improve visibility into supply, demand, and pricing. The report applies these industry views to Samsung Electronics, highlighting the earnings power of its memory business, HBM progress, and potential shareholder returns, while reiterating Buy ratings on both the common and preferred shares.

Core views

First, tight traditional DRAM supply and rising spot prices support consecutive double-digit sequential price increases in 3Q26 and 4Q26. Second, HBM prices could rise significantly next year as traditional DRAM prices increase, with Goldman Sachs’ forecast of 87% year-over-year growth in SEC’s HBM prices above market consensus. Third, LTAs strengthen customer commitment through upfront payments, take-or-pay clauses, and cancellation penalties, with more than half of server DRAM already covered by LTAs. Fourth, capacity expansion by Chinese memory manufacturers does not equate to a near-term competitive threat, as gaps in yield, technology, and reliability limit their near- to medium-term impact. Fifth, hybrid bonding is expected to be adopted gradually, while current mass-production yields still require time and investment to improve.

Analysis framework

The report combines expert conference-call notes with the company’s investment thesis. It first summarizes the DRAM, HBM, LTA, competitive landscape, and advanced-packaging technology roadmap, then maps these to Samsung Electronics’ earnings power, valuation, and rating. Valuation uses a 2026-2027E EV/EBITDA-based SOTP approach to set separate 12-month target prices for the common and preferred shares.

Methodology notes

• Valuation methodologyEV/EBITDA-based SOTP

  Sum-of-the-parts valuation

  The W480,000 12-month target price for the common shares is based on a 2026-2027E EV/EBITDA SOTP valuation; the preferred-share target price of W360,000 reflects a 25% discount to the common shares.

• Factor frameworkGS Factor Profile

  Comparison of growth, financial returns, valuation multiples, and composite percentiles

  Goldman Sachs positions the stock relative to the broader market and industry peers using growth, financial returns, valuation multiples, and composite metrics.

• Event frameworkM&A Rank

  Potential acquisition probability score

  Goldman Sachs uses an M&A Rank from 1 to 3 to assess the probability that a covered company becomes an acquisition target; when ranked 1 or 2, the M&A component may be incorporated into the target price.

• Industry supply-and-demand frameworkLTA

  Long-term agreement enforceability

  LTAs strengthen customer commitment and demand visibility through large upfront payments, take-or-pay clauses, and cancellation penalties. The report states that more than half of server DRAM is covered by LTAs.

Asset mapping & comparison

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

• Samsung Electronics (005930.KS)

  Core covered security; Buy rating and W480,000 target price for the common shares

  Strengths

  Leading market shares across multiple products, including memory chips, OLED panels, smartphones, and TVs; benefits from strong DRAM pricing, HBM progress, and LTA customer commitment.

  Weaknesses

  Smartphone margins and mobile OLED market share could still weigh on the overall investment thesis.

  Comparison

  Compared with Chinese memory suppliers, the report believes leading manufacturers such as SEC retain clear advantages in yield, technology, and product reliability.

  Risks

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

• Samsung Electronics (Pref) (005935.KS)

  Covered preferred-share security; Buy rating and W360,000 target price

  Strengths

  Benefits from the same memory earnings-upside thesis as the common shares and is valued under a preferred-share discount framework.

  Weaknesses

  Valuation depends on the common-share discount assumption; changes in liquidity and the discount could affect returns.

  Comparison

  The target price assumes a 25% discount to the common shares, based on a two-factor model and the average preferred-share discount over the past month.

  Risks

  The same industry and company fundamental risks as the common shares, along with volatility in the preferred-share discount.

• DRAM/HBM value chain

  Core industry driver in the report

  Strengths

  Traditional DRAM shortages, strong HBM demand, and stronger LTA customer commitment all support upside in pricing and earnings.

  Weaknesses

  Capacity additions are occurring faster than historically; if demand or product mix falls short of expectations, supply-demand balance could weaken.

  Comparison

  The high HBM conversion ratio limits effective bit growth, meaning new capacity may not quickly translate into pressure on traditional supply.

  Risks

  HBM prices below expectations, weakening momentum in traditional DRAM price increases, and slower-than-expected progress in hybrid-bonding mass-production yields.

Key data

• Conference date2026-07-28Goldman Sachs held a virtual conference with Korean memory experts.
• Common-share target priceW480,000Samsung Electronics common-share 12-month target price, based on a 2026-2027E EV/EBITDA SOTP.
• Preferred-share target priceW360,000Samsung Electronics preferred-share 12-month target price, based on a 25% discount to the common shares.
• Analyst ratingBuyBoth the common and preferred shares are rated Buy.
• DRAM price outlookPotential double-digit sequential growth in both 3Q26 and 4Q26Experts believe traditional DRAM prices are supported by supply shortages and rising spot prices.
• SEC HBM price forecast+87% yoyGoldman Sachs’ forecast for the year-over-year increase in SEC’s HBM prices next year, above the Bloomberg sell-side consensus of +52%.
• Server DRAM LTA coverageMore than halfExperts expect LTA coverage to increase further.
• Number of key downside risks3Including deterioration in memory supply and demand, contraction in smartphone margins, and loss of mobile OLED share.

Impact & implications

If the report’s view materializes, rising memory prices and LTA enforceability will improve Samsung Electronics’ earnings visibility over the next several quarters, while HBM pricing elasticity could become an important source of earnings and valuation upgrades in 2027. For investors, the key is not simply capacity expansion, but effective bit growth at a high HBM conversion ratio, LTA coverage, and progress in HBM mass production. The report assesses the near- to medium-term threat from Chinese manufacturers as limited, but longer-term competition still requires monitoring of yield and reliability improvements.

Risks

• Major deterioration in memory supply and demand.
• Significant contraction in smartphone margins.
• Loss of mobile OLED market share.
• HBM price increases below Goldman Sachs’ or market expectations.
• LTA coverage or enforceability below expectations, reducing pricing and demand visibility.
• If Chinese memory suppliers rapidly improve yield, technology, and reliability, medium- to long-term competition could intensify.
• Improving mass-production yields for hybrid bonding or other advanced-packaging technologies may require considerable time and investment.

What to watch

• Actual contract and spot price trends for traditional DRAM in 3Q26 and 4Q26.
• 2027 HBM price negotiations and whether SEC’s year-over-year HBM price growth approaches 87%.
• Server DRAM LTA coverage and the strength of terms such as upfront payments, take-or-pay clauses, and cancellation penalties.
• SEC HBM customer qualification, shipment progress, and yield improvements.
• The extent to which the high HBM conversion ratio constrains industry effective bit growth.
• Changes in Chinese memory suppliers’ capacity expansion, yields, technology generation, and product reliability.
• Changes in Samsung Electronics’ smartphone margins and mobile OLED share.