Samsung Securities: Slowing Memory Chip Price Gains Don't Signal Peak Profits; Maintains "Buy" Ratings on Samsung and SK Hynix

Odaily News — South Korean analysts believe that even if memory chip price gains slow, increased shipments and improved product mix can still drive sustained corporate profit growth. Since supply is difficult to expand rapidly, narrowing price increases should not be directly interpreted as a signal of declining profits.

Samsung Securities researcher Lee Jong-wook and others noted: "Peaking margins do not necessarily mean peaking profits. The most notable feature of this cycle is the duration of the profit cycle." On the supply side, memory chipmakers are finding it difficult to aggressively expand capacity as they did in the past. Because high-bandwidth memory (HBM) production consumes part of existing capacity, and new production facilities also take time to ramp up, the time lag between slowing memory chip price gains and declining corporate profits is expected to lengthen.

Based on this assessment, analysts believe that recent stock price weakness has overreflected market concerns about earnings prospects, and therefore maintain "Buy" ratings on Samsung Electronics and SK Hynix. (Jinshi)