---
endpoint: analytics
pattern: Technology
status: done
latency_ms: 241663
conversation_id: f687c73a-88c4-4402-a650-0b7be4e8132b
citations: 22
created: 2026-05-31 21:19:02Z
---

# What is the investment thesis for Samsung Electronics in the current market environment?

# Samsung Electronics (005930 KS) — Investment Thesis in the Current Market Environment

**Subject:** Samsung Electronics Co., Ltd. | **Price:** ₩61,300 (priced 25-Jun-2025) | **CLSA Rating:** O-PF | **TP:** ₩73,000 (+19% upside) [14]

> **Vintage caveat**: CLSA's latest covering note in this corpus is dated **25-Jun-2025** [14]. Public-data points (Q1 FY2026 earnings call, May 2026 news flow) extend the picture into the most recent quarter. The thesis below is anchored on the CLSA O-PF view and stress-tested against the public Q1 FY2026 print and current market data.

---

## 1. The Thesis in One Paragraph

Samsung is a **valuation-supported, "second-derivative" AI memory play** that is now beginning to convert. CLSA reiterates **Outperform with a ₩73,000 target**, framing the stock as cheap insurance on the AI memory upcycle — trading at **0.9x forward book vs a 10-year average of 1.2x** [1]. The core debate has been Samsung's lagging position in HBM3E 12-Hi qualification with Nvidia and AMD versus SK Hynix, plus persistent foundry losses [3] — but the public Q1 FY2026 release (29-Apr-2026) shows the inflection has arrived: **record revenue of KRW 134tn and record OP of KRW 57tn at a 43% operating margin** [15], with Samsung **already shipping industry-first mass-produced HBM4 and SOCAMM2** [17]. Memory pricing power, multi-year AI supply agreements [18], and an aggressive capital-return program [19] now sit on top of a still-discounted multiple — a classic "earnings catching up to AI peers, multiple yet to rerate" set-up.

---

## 2. Pillars of the Bull Case

### Pillar A — Memory super-cycle is real and tightening, not normalizing
- **DRAM spot pricing has gone parabolic**: DDR4 8Gb 2666 went from ~US$1.6 in Jan-25 to **~US$5.9 by May-25, +212% from the March trough** [13].
- **Structural supply squeeze**: HBM consumes ~3x the wafer area of conventional DRAM, so as suppliers shift mix toward HBM, **conventional DRAM supply will shrink in 2H25** while AI/server demand accelerates [7].
- **HBM supply tightness extends into 2026**: SEC sees HBM4 supply constrained by chip-size and process complexity well into next year [8].
- **Customer inventory healthy / declining**, reducing risk of a 2H pullback even after tariff-driven 1H restocking [7]. Cloud capex is forecast at **+35% in 2025 and +20% in 2026** by CLSA [11].

### Pillar B — HBM execution risk is converting from headwind to tailwind
- The original CLSA bear-case wrinkle: HBM3E 12-Hi qualification with Nvidia and AMD was **delayed**, leading CLSA to flag downside to its 40% 2025 HBM shipment growth forecast (vs. SEC's +100% target) [3] and a 10% miss to 2Q25 OP at **₩6.1tn vs consensus** [2].
- **Resolution underway in public data**: On the Q1 FY2026 call, Samsung confirmed it began **shipping industry-first mass-produced HBM4 and SOCAMM2**, with HBM4E samples scheduled for 2Q26 [17].
- Management also confirmed that **major AI customers are signing multi-year supply agreements** seeking forward volume commitments — a structural shift in the memory business model from spot-driven to contracted, which lifts earnings visibility and dampens cyclicality [18].

### Pillar C — Foundry turning the corner
- 2Q25 foundry operating loss was ~₩2.2tn, but **fab utilization is expected to improve in 2H25** as 3nm chips for foldables, 8nm chips for the Nintendo Switch 2, and 5nm chips for other customers ramp [4].
- **2nm GAA process is the strategic lever**: talks with Qualcomm and the captive Galaxy S26 program are progressing [10], with 1Q26 results confirming **the 1.40-nanometer processor is on track and 2-nano engagement with major customers is active**.
- This is the "free option" in the thesis — foundry is currently a drag on group earnings; even narrowing the loss adds material upside, and a 2nm win would re-rate the franchise.

### Pillar D — Valuation and Capital Return
- **CLSA financial estimates (post-cut)**: 2025/26 OP trimmed 4%/2%; **2025E PE 12.6x, 2026E 10.6x, 2027E 9.1x** [5].
- **0.9x P/B vs 1.2x 10-year average** [1] — the rating is anchored on valuation support, not on Samsung being the leader in any single sub-segment.
- **Capital return is now meaningful**: SEC completed its **KRW 10tn share buyback** announced in Nov-2024 by Sep-2025, and in Q1 FY2026 cancelled **73.4mn common + 13.6mn preferred shares (1.2% and 1.7% of outstanding, ₩14.6tn valuation)** [19] — direct reduction of float on top of the regular KRW 9.8tn annual dividend.

---

## 3. Quantitative Snapshot

### CLSA Earnings Profile (per 11-Jun-2025 update) [5]
| (₩bn) | FY23A | FY24A | FY25CL | FY26CL | FY27CL |
|---|---|---|---|---|---|
| Revenue | 258,935 | 300,871 | 316,449 | 346,847 | 360,288 |
| Net profit | 14,473 | 33,621 | 32,347 | 38,512 | 44,699 |
| EPS (₩) | 2,131 | 4,950 | 4,762 | 5,670 | 6,581 |
| EPS growth (% YoY) | (73.6) | 132.3 | (3.8) | 19.1 | 16.1 |
| **PE (x)** | 28.1 | 12.1 | **12.6** | **10.6** | **9.1** |
| Net debt/equity (%) | (21.9) | (23.2) | (26.9) | (25.9) | (27.1) |

### Public Q1 FY2026 Print (29-Apr-2026) [15]
| Metric | Value |
|---|---|
| Revenue | KRW 134 tn (record, +43% QoQ) |
| Operating profit | KRW 57 tn (record, +185% QoQ) |
| Operating margin | 43% (vs 21% prior quarter) |
| EPS (common) | KRW 7,123 |
| DRAM blended ASP | +low-90s% QoQ |
| NAND blended ASP | +high-80s% QoQ |
| CapEx 1Q26 | ₩11.2tn (₩10.2tn to DS, ₩0.6tn to Display) |

The Q1 FY2026 print is several multiples of the FY26CL run-rate CLSA was modeling — meaningful upside to consensus and CLSA estimates is the natural read.

---

## 4. Risks and What Could Break the Thesis

| Risk | Severity | Detail |
|---|---|---|
| **HBM4 ramp slippage** | High | If HBM4 mass production lags Nvidia's Ruben GPU timeline (2H26), Hynix and Micron retain dominant share [9][12]. SK Hynix currently supplies ~70% of Nvidia HBM [12]. |
| **China memory ramp** | Medium | Samsung's own adviser has flagged that **China chipmakers' rapid production ramp-up could dampen the memory-chip boom** [22] — a structural intermediate-term overhang on conventional DRAM/NAND. |
| **Labor friction** | Medium | The largest Samsung union triggered an 18-day general strike from 21-May-2026 over chip-division bonus sharing; a Suwon court partially granted Samsung's injunction to limit production impact, but the dispute persists [20][21]. |
| **KOSPI risk-off / FX** | Medium | KOSPI has been under pressure on global AI valuation concerns; KRW near record lows vs USD adds translation noise [20]. |
| **Foundry stays stuck** | Medium | A 2H25 foundry recovery is core to the thesis [4]; if 2nm wins do not materialize, the foundry drag persists. |
| **Tariff demand pull-in unwind** | Medium-Low | 1H demand was elevated by tariff-related pull-in; SEC argues customer inventory is healthy, but a 2H normalization remains a watch item [7]. |

---

## 5. Cross-Reference: Where CLSA Differs from Management

| Topic | CLSA (Jun-25) | Samsung Management (Q1 FY26, Apr-26) |
|---|---|---|
| 2025 HBM growth | Cautious — 40% YoY [3] | Original target +100% YoY [3] |
| 2H25 outlook | Reduced losses, mix improvement [1] | "Memory price to stay in current upward trend" [16] |
| HBM4 timing | Mass production "may not commence until mid-1H26" [3] | **Already mass-producing HBM4** in 1Q26 [17] |
| Long-term contracts | Not flagged | **Multi-year supply agreements signed with major AI customers** [18] |

The direction of revision in the gap between CLSA's prudent forecasts and Samsung's actual execution is **positive for the thesis** — every key dispute point in the bear case has resolved in Samsung's favor since the CLSA update.

---

## 6. Synthesis — The Practical Set-Up Today

Samsung today is a **mean-reversion + execution-catalyst** trade rather than a pure AI beta play:

1. **Valuation cushion**: 0.9x forward book is below the long-run trough range, providing margin of safety even if AI memory normalizes [1][14].
2. **Earnings inflection has confirmed**: Record Q1 FY2026 print (43% operating margin) demonstrates the operating leverage is now being captured [15].
3. **HBM execution risk has materially de-risked**: HBM4 mass production has started; multi-year customer commitments are signed [17][18].
4. **Capital return is a real second-order driver**: the ₩14.6tn share cancellation is a structural EPS tailwind on top of the operating beat [19].
5. **What's still in the price**: the foundry turnaround, HBM share recapture vs Hynix [12], and a multiple rerating from <1.0x P/B toward the 1.2x long-run average — these are the three legs that can drive the next leg up.

The asymmetry: **earnings are already inflecting at the operational level, while the multiple has not yet rerated** — that is the core "alpha gap" in the current thesis.

---

**Sources**
[1] Samsung Electronics - O-PF (Weak 2Q but valuation support) — CLSA (11-Jun-2025), 607961798LinqAlpha.PDF — thesis paragraph
[2] Samsung Electronics - O-PF (Weak 2Q but valuation support) — CLSA (11-Jun-2025) — 2Q25 OP impacted by weak HBM/FX/foundry
[3] Samsung Electronics - O-PF (Weak 2Q but valuation support) — CLSA (11-Jun-2025) — HBM product qualifications taking longer
[4] Samsung Electronics - O-PF (Weak 2Q but valuation support) — CLSA (11-Jun-2025) — Foundry fab utilisation expected to improve in 2H25
[5] Samsung Electronics - O-PF (Weak 2Q but valuation support) — CLSA (11-Jun-2025) — Financials table
[6] Samsung Electronics - O-PF (Treading carefully amid uncertainties) — CLSA (29-May-2025), 607960821LinqAlpha.PDF
[7] Samsung Electronics - O-PF (Treading carefully amid uncertainties) — CLSA (29-May-2025) — Memory demand rollover in 2H unlikely
[8] Samsung Electronics - O-PF (Treading carefully amid uncertainties) — CLSA (29-May-2025) — Tight supply of HBM to last throughout 2026
[9] Samsung Electronics - O-PF (Treading carefully amid uncertainties) — CLSA (29-May-2025) — HBM4 ramp aligned with Nvidia Ruben
[10] Samsung Electronics - O-PF (Treading carefully amid uncertainties) — CLSA (29-May-2025) — Expecting 2nm orders for foundry
[11] Korea Memory sector outlook (Micron call read across; solid AI demand) — CLSA (25-Jun-2025), 607962817LinqAlpha.PDF — DRAM ASP outlook 2H25
[12] Korea Memory sector outlook — CLSA (25-Jun-2025) — Hynix HBM dominance + customer diversification
[13] Korea Memory sector outlook — CLSA (25-Jun-2025) — DDR4 spot price chart, +212% from March 2025 trough
[14] Korea Memory sector outlook — CLSA (25-Jun-2025) — Samsung Electronics target ₩73,000, +19.1% upside
[15] Samsung Electronics Q1 2026 Earnings Call (29-Apr-2026) — CFO Sooncheol Park, record revenue & OP
[16] Samsung Electronics Q1 2026 Earnings Call (29-Apr-2026) — CFO Park, 2Q26 memory pricing outlook
[17] Samsung Electronics Q1 2026 Earnings Call (29-Apr-2026) — EVP Jaejune Kim, HBM4 mass production began
[18] Samsung Electronics Q1 2026 Earnings Call (29-Apr-2026) — EVP Kim, multi-year AI supply agreements
[19] Samsung Electronics Q1 2026 Earnings Call (29-Apr-2026) — IR Daniel Oh, ₩14.6tn share cancellation
[20] StreetAccount (20-May-2026) — Samsung wage talks breakdown, KOSPI under pressure
[21] StreetAccount (18-May-2026) — Samsung drives Kospi's turnaround; partial injunction granted
[22] StreetAccount APAC Themes (20-May-2026) — China chipmakers' ramp-up could dampen memory-chip boom (Samsung adviser)

## Citations

- [1] **607961798LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961798LinqAlpha.PDF>
- [2] **607961798LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961798LinqAlpha.PDF>
- [3] **607961798LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961798LinqAlpha.PDF>
- [4] **607961798LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961798LinqAlpha.PDF>
- [5] **607961798LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961798LinqAlpha.PDF>
- [6] **607960821LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960821LinqAlpha.PDF>
- [7] **607960821LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960821LinqAlpha.PDF>
- [8] **607960821LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960821LinqAlpha.PDF>
- [9] **607960821LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960821LinqAlpha.PDF>
- [10] **607960821LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960821LinqAlpha.PDF>
- [11] **607962817LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962817LinqAlpha.PDF>
- [12] **607962817LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962817LinqAlpha.PDF>
- [13] **607962817LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962817LinqAlpha.PDF>
- [14] **607962817LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962817LinqAlpha.PDF>
- [15] **Samsung Electronics Co., Ltd., Q1 2026 Earnings Call, 29-April-2026 9** · external
- [16] **Samsung Electronics Co., Ltd., Q1 2026 Earnings Call, 29-April-2026 9** · external
- [17] **Samsung Electronics Co., Ltd., Q1 2026 Earnings Call, 29-April-2026 9** · external
- [18] **Samsung Electronics Co., Ltd., Q1 2026 Earnings Call, 29-April-2026 9** · external
- [19] **Samsung Electronics Co., Ltd., Q1 2026 Earnings Call, 29-April-2026 9** · external
- [20] **Samsung Electronics wage talks breakdown adding to week's pressure on the Kospi** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4687543&_doc_date=2026-05-20&_doc_product=SA>
- [21] **Samsung drives Kospi's turnaround amid volatile session** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4684678&_doc_date=2026-05-18&_doc_product=SA>
- [22] **StreetAccount Themes APAC Headlines (20-May): China chipmakers ramp-up could dampen memory-chip boom, Samsung adviser says** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4687625&_doc_date=2026-05-20&_doc_product=SA>

