Samsung Electronics has reportedly secured long-term contracts covering approximately 80% of its planned memory semiconductor production for 2027, while rising high-bandwidth memory (HBM) prices are expected to support further earnings growth (21/10).

KB Securities forecasts that the company's operating profit will reach 555 trillion won next year, an increase of 51% year-on-year.

Samsung Electronics Secures 80% of Planned 2027 Memory Production

Kim Dong-won, head of KB Securities Research Headquarters, stated in a report published on October 20 that Samsung Electronics is estimated to have secured approximately 80% of its planned 2027 memory production through long-term supply agreements.

According to the report, around 70% of the company's planned production of general-purpose memory, including dynamic random-access memory (DRAM) and NAND flash, has been covered by five-year supply agreements with major global technology companies. Samsung Electronics has also completed supply contracts for its entire planned annual HBM production.

Major data center operators continue to compete to secure the remaining uncontracted memory supply, according to the report.

HBM4 Expected to Drive Memory Chip Prices Higher

KB Securities expects the average selling price of HBM next year to rise by 100% to 150% compared with this year. The increase is expected to be driven by a larger share of next-generation HBM4 products, which command higher prices.

HBM4 is projected to account for 80% of Samsung Electronics' HBM sales next year, up from 40% this year. The report also expects power efficiency to improve by 40% compared with the previous generation.

Kim expects rising HBM prices to push Samsung Electronics' average DRAM selling price in the first quarter of next year up by a double-digit percentage compared with the previous quarter.

Samsung Electronics Operating Profit Forecast to Reach 555 Trillion Won

KB Securities estimates that Samsung Electronics' operating profit will reach 367 trillion won this year, representing a 742% increase year-on-year. For next year, the brokerage forecasts operating profit of 555 trillion won, an increase of 51% compared with this year.

The projections reflect expectations for higher memory prices and increased sales volumes, alongside the growing share of HBM4 products in the company's HBM sales.

Samsung Shares Fall 19% Amid AI Investment Concerns

Samsung Electronics' share price has declined by 19% this month, according to the report. The decline has been attributed to concerns about the sustainability of artificial intelligence investment and rising interest rates.

Despite the share price decline, the analysis indicates that expectations for increased memory sales volumes and higher product prices support the outlook for continued earnings growth.

PHOTO: BUSINESS TIMES

This article was created with AI assistance.

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