KB Securities forecasts Samsung Electronics operating profit of 555 trillion won next year
In short
KB Securities said on 20 October that Samsung Electronics is estimated to have secured about 80% of its planned memory output for next year under long-term supply contracts. It forecast operating profit of 367 trillion won this year and 555 trillion won next year, and called next year's profit growth virtually certain.
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KB Securities forecast on 20 October that Samsung Electronics will post operating profit of 555 trillion won next year, up 51% from this year. It put this year's operating profit at 367 trillion won, an increase of 742% on the previous year. Kim Dong-won, head of research at KB Securities, said in a report that Samsung is estimated to have already secured about 80% of its planned memory output for next year through long-term supply agreements (LTAs). [ 1 , 2 , 3 , 4 ]
According to Kim, about 70% of next year's output of commodity memory such as DRAM and NAND flash is covered by five-year LTAs with global big tech customers. Supply contracts for all of the annual output of high-bandwidth memory (HBM) have been completed. For the remaining 20% of memory volume that is not under contract, hyperscalers are competing to secure supply, he said. [ 1 , 2 , 3 , 4 ]
KB Securities expects HBM average selling prices to rise 100-150% next year, helped by HBM4, which is priced at the industry's highest level, and said HBM4 will lead DRAM price increases from the first quarter. First-quarter DRAM prices are expected to rise by a double-digit percentage from the previous quarter. HBM4's share of Samsung's HBM sales is forecast to double from 40% this year to 80% next year. Kim described Samsung's HBM4 as industry-best in speed and bandwidth and said its power efficiency should improve about 40% over HBM3E. [ 1 , 2 , 3 , 4 ]
The report also addressed the share price. Samsung shares have fallen 19% this month amid doubts about the sustainability of AI investment and worries about rising interest rates, Kim said. He judged that the correction stems from a valuation adjustment and weaker investor sentiment caused by macroeconomic uncertainty, not from damage to the company's essential earning power. [ 1 , 3 , 4 ]
Kim said share price volatility could widen in the short term because of macroeconomic variables, but that it is unlikely the direction of next year's profit growth, based on contracted volumes and rising memory prices, will be impaired. He added that next year's profit increase is virtually certain. Yonhap noted that KB Securities has given Samsung Electronics a target share price of 600,000 won. [ 1 , 2 , 3 , 4 ]
Why it matters
The forecast comes after Samsung Electronics shares fell 19% this month, and KB Securities argued the drop reflects macroeconomic uncertainty rather than weaker earning power. The figures are one brokerage's estimates, reported by business outlets and Yonhap.
Key facts
- KB Securities forecast Samsung Electronics operating profit of 367 trillion won this year and 555 trillion won next year, increases of 742% and 51% respectively. [ 1 , 2 , 3 , 4 ]
- KB Securities estimates Samsung has already secured about 80% of its planned memory output for next year under long-term supply agreements. [ 1 , 2 , 3 , 4 ]
- About 70% of next year's commodity memory output, such as DRAM and NAND flash, is covered by five-year agreements with global big tech customers, and all annual HBM output is under supply contracts, according to KB Securities. [ 1 , 2 , 3 , 4 ]
- KB Securities expects average HBM selling prices next year to rise 100-150%. [ 1 , 2 , 3 , 4 ]
- KB Securities expects first-quarter DRAM prices next year to rise by a double-digit percentage from the previous quarter. [ 1 , 2 , 3 , 4 ]
- HBM4's share of Samsung's HBM sales is forecast to rise from 40% this year to 80% next year. [ 1 , 2 , 3 , 4 ]
- Samsung Electronics shares fell 19% this month, according to the KB Securities report. [ 1 , 3 ]
Confirmed by several sources
- KB Securities estimates Samsung Electronics has secured about 80% of next year's planned memory output through long-term supply contracts. [ 1 , 2 , 3 , 4 ]
- KB Securities forecasts Samsung operating profit of 367 trillion won this year and 555 trillion won next year. [ 1 , 2 , 3 , 4 ]
- KB Securities attributes the recent share price decline to macroeconomic uncertainty and weaker investor sentiment rather than damage to Samsung's earning power. [ 1 , 3 , 4 ]
Still unclear
- Whether Samsung has actually signed the contracts at the 80% level. The figure is KB Securities' estimate; the documents carry no confirmation from Samsung.
- Whether next year's profit growth will materialise as forecast. The documents give KB Securities' view that growth is virtually certain; no other analyst or Samsung statement is cited.
- KB Securities' target price for Samsung Electronics of 600,000 won. Only Yonhap mentions it, and it says KB has been giving this target price, not that it was changed in this report.