Kioxia’s Strong Guidance Signals Rising NAND Volume and Price; Maintain Buy on Korean Memory Leaders

Overview

This report analyzes the implications for major Korean memory chip suppliers—SK Hynix and Samsung Electronics—based on Kioxia’s Q1 FY2026 (March quarter 2026) financial results and forward guidance. The core conclusion is that Kioxia’s strong revenue growth guidance signals continued substantial increases in NAND average selling price (ASP), alongside further improvement in operating margin (OPM). Given similar OPM performance among the three manufacturers in the prior quarter, Goldman Sachs believes current earnings forecasts for the Korean firms are overly conservative and thus maintains Buy ratings on both SK Hynix and Samsung Electronics.

Core views

Clear signals of price and margin expansion: Kioxia achieved more than double-digit growth in USD-denominated blended ASP in Q1 FY2026, despite a 10% sequential decline in bit shipments due to equipment maintenance and inventory cleanup; bit shipments for datacenter SSDs nonetheless rose sequentially. More importantly, Kioxia issued strong Q2 FY2026 revenue guidance of +70% quarter-on-quarter, noting that increased shipments will contribute only marginally—indicating that a sharp rise in ASP will be the primary driver of revenue growth. Based on this, Goldman Sachs believes NAND ASP growth potential for SK Hynix and Samsung Electronics exceeds current forecasts (currently +55% and +45% quarter-on-quarter, respectively). Furthermore, Kioxia’s Q2 FY2026 OPM guidance stands at 74%, significantly above Goldman Sachs’ current NAND OPM forecasts for the Korean companies (~60%). Given the comparable OPM levels across all three firms in Q1 FY2026, this gap suggests meaningful upside potential for OPM forecasts for the Korean firms. Persistent supply-demand tightness: Kioxia maintains an optimistic view of the NAND market, citing very tight supply conditions expected throughout FY2026 and FY2027—consistent with Samsung Electronics’ prior comments about tightening supply in 2027. We forecast NAND bit growth in the high-teens percentage range for FY2026, with shortages continuing into FY2027. Longer term, NAND demand is projected to grow at a 20% compound annual growth rate (CAGR), driven primarily by rising AI datacenter and enterprise application requirements. Potential catalyst: Kioxia announced it is preparing for an ADR (American Depositary Receipt) listing to broaden its investor base and enhance corporate value. As SK Hynix holds a significant stake in Kioxia via a consortium, this potential listing could positively influence market sentiment toward SK Hynix.

Analysis framework

The firm employs a typical 'peer benchmarking and transmission analysis' methodology. First, it deeply dissects Kioxia’s financial guidance, using a 'volume-price decomposition' logic (Revenue Growth = Volume Change + ASP Change) to identify ASP as the key driver behind the next quarter’s explosive revenue growth. Second, applying industry commonality assumptions—that leading vendors exhibit highly correlated margin trends and pricing power over the same cycle—the firm uses Kioxia’s high OPM guidance (74%) as an anchor point to contrast Goldman Sachs’ internal, conservative OPM forecasts for SK Hynix and Samsung Electronics (~60%), thereby inferring expectation gaps and upside potential. Finally, it validates the sustainability of price increases using a supply-demand framework (supply tightness extending into 2027) and incorporates event-driven factors (ADR listing) to assess sentiment impact on specific names.

Methodology notes

• Industry/sector analysis frameworkVolume-price decomposition

  Volume-Price Decomposition

  Decomposing revenue growth into two dimensions: 'change in shipment volume' and 'change in average selling price (ASP)'. In this report, the firm identifies ASP—not volume—as the dominant driver of Kioxia’s next-quarter revenue surge, implying peers will similarly benefit from price increases.

• Industry/sector analysis frameworkSupply-demand framework

  Supply-Demand Framework

  Assessing price trends by analyzing shifts on the supply side (e.g., equipment maintenance, capacity constraints) and demand side (e.g., AI datacenters, enterprise applications). The report notes persistent supply tightness through FY2026–FY2027, supporting the logic for ASP and margin expansion.

• Valuation methodologyPB valuation

  P/B Valuation

  Applies price-to-book (P/B) valuation to SK Hynix, assigning a target P/B multiple of 2.9x to derive a 12-month target price of KRW 1.8 million. This is a commonly used valuation anchor for cyclical semiconductor companies.

• Valuation methodologyEV/EBITDA valuation

  EV/EBITDA Valuation

  Applies enterprise value-to-EBITDA (EV/EBITDA) valuation combined with sum-of-the-parts (SOTP) analysis to Samsung Electronics, yielding a target price of KRW 320,000 for its common stock. This method better captures the value of large, capital-intensive, diversified conglomerates.

Asset mapping & comparison

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

• SK Hynix (000660.KS)

  Beneficiary: As a major shareholder in Kioxia (via a consortium) and a leading NAND supplier, SK Hynix directly benefits from industry-wide ASP increases and margin recovery.

  Strengths

  Significant upside potential for NAND ASP and OPM; potential sentiment premium arising from Kioxia’s ADR listing given its equity stake.

  Comparison

  Compared to Samsung Electronics, SK Hynix has higher exposure to the memory sector and greater sensitivity to NAND price elasticity.

  Risks

  Deterioration in memory supply-demand dynamics; delays in technology transitions; weak demand from smartphones, PCs, and servers; reduced AI-related capex impacting HBM demand.

• Samsung Electronics (005930.KS)

  Beneficiary: As the world’s leading NAND supplier, Samsung Electronics directly benefits from supply-demand tightness driving price increases and margin expansion.

  Strengths

  NAND business profitability likely to exceed expectations; diversified business structure provides some defensive qualities.

  Comparison

  Relative to SK Hynix, Samsung Electronics’ more complex business mix may dilute the valuation uplift from NAND price increases across other divisions.

  Risks

  Deterioration in memory supply-demand dynamics; sharp contraction in smartphone profitability; loss of mobile OLED market share.

Key data

• Kioxia CY2Q26 Revenue Guidance+70% quarter-on-quarterDriven primarily by ASP; shipment volume contribution minimal
• Kioxia CY2Q26 Operating Margin Guidance74%Well above Goldman Sachs’ current ~60% forecasts for Korean peers
• SK Hynix NAND ASP Forecast+45% quarter-on-quarterGoldman Sachs believes this may be underestimated and has upside potential
• Samsung Electronics NAND ASP Forecast+55% quarter-on-quarterGoldman Sachs believes this may be underestimated and has upside potential
• NAND Long-Term Demand CAGR20%Primarily driven by AI datacenters and enterprise applications
• SK Hynix Target PriceKRW 1,800,000Based on a target P/B multiple of 2.9x
• Samsung Electronics Common Stock Target PriceKRW 320,000Based on EV/EBITDA and sum-of-the-parts (SOTP) valuation

Impact & implications

The report concludes that Kioxia’s guidance not only validates the strength of the NAND industry recovery but also suggests the current pricing cycle may persist longer than currently anticipated by the market for Korean leaders. For SK Hynix and Samsung Electronics, this implies their upcoming quarterly financial results—particularly for NAND-related revenue and profitability—may exceed consensus expectations, thereby supporting share price performance. Additionally, Kioxia’s ADR listing process could serve as an incremental sentiment factor influencing SK Hynix’s valuation.

Risks

• Significant deterioration in memory supply-demand dynamics
• Delays in technology transition timelines
• Weak demand from smartphones, PCs, and servers, affecting traditional memory demand
• Strong progress in Samsung Electronics’ HBM business potentially squeezing HBM revenue and profits for other vendors
• Reduced AI-related capital expenditures, negatively impacting overall HBM demand and profitability
• Sharp contraction in smartphone profitability
• Loss of mobile OLED market share

What to watch

• Actual realization of NAND ASP and operating margins for SK Hynix and Samsung Electronics in upcoming quarters
• Progress on Kioxia’s ADR listing and its impact on SK Hynix sentiment
• Continued validation of NAND supply tightness into FY2027
• Effectiveness of AI datacenters in driving enterprise NAND demand