---
endpoint: analytics
pattern: Technology
status: done
latency_ms: 166538
conversation_id: 75e96dc3-00bd-4365-84eb-952bbcb82cb0
citations: 15
created: 2026-05-31 21:20:14Z
---

# What’s the bull case bear case for Samsung Electronics?

# Samsung Electronics (005930-KR) — Bull Case / Bear Case

**Source vintage check**: CLSA's latest single-stock coverage in the corpus is dated **11-Jun-2025** ("Weak 2Q but valuation support") with rating **Outperform (O-PF)**. Public Q1 FY2026 earnings call (held 29-Apr-2026) provides Samsung's own most recent disclosure.

Samsung labels its fiscal year by calendar year-end (e.g., Q1 FY2026 = Jan–Mar 2026). The data spans both CLSA's mid-2025 view and Samsung's own Q1 FY2026 results.

---

## BULL CASE

### 1. Memory/HBM up-cycle is structural, not cyclical
- Samsung's own Q1 FY2026 print delivered **record quarterly revenue of KRW 134tn (+43% QoQ) and OP of KRW 57tn (+185% QoQ), with OP margin expanding to 43% from 21%** — the Memory business posted its second straight quarterly earnings record [11].
- Management guides that **memory prices will stay in the current upward trend, driven by ongoing expansion in AI infrastructure** and the spread of agentic AI [14]. CLSA flags **HBM supply remains constrained in both 2025 and 2026** — HBM production requires 3x more wafers than conventional DRAM, structurally squeezing conventional DRAM supply [5].
- CLSA's investment thesis: SEC is the **global No.1 in memory (DRAM + NAND) and top logic foundry vendor**, with key drivers being (1) accelerating customer inventory adjustment, (2) AI-driven high-value-added demand, (3) better cost competitiveness driving share gains in the upcycle, and (4) aggressive HBM capacity expansion [2].

### 2. HBM franchise is finally scaling
- CLSA forecasts **HBM revenue growth from KRW 9.4tn in 2024 → KRW 13.5tn in 2025 → KRW 22.0tn in 2026CL**, rising from 18% to 32% of DRAM revenue [8]. HBM capacity (wafer per month) doubles from ~120k in 2024 to **200k by 2026CL** [9].
- Samsung's own guidance is even more aggressive: **HBM sales to increase substantially by more than threefold YoY in 2026** [12]. The company became the **first in the industry to commercially ship HBM4 in February [2026]**, with production-ready capacity "fully booked and sold out," and expects HBM4 sales to exceed 50% of total HBM sales from Q3 FY2026 [12].

### 3. Foundry recovery + 2nm catalyst
- CLSA: **Better fab utilisation in 2H25 should lead to reduced losses** versus 1H25, supported by 3nm chips for foldables, 8nm for Nintendo Switch 2, and 5nm for other customers [1].
- SEC is **betting on its GAA-based 2nm process** to turn foundry around — discussions are underway with Qualcomm and the captive Galaxy S26 for 2nm adoption [6]. By Q1 FY2026, management confirms it is **in active talks with multiple large-scale AI and HPC customers on 2-nano projects** with results expected near-term [13].

### 4. Memory shortage spillover benefits component pricing power
- Per Samsung's own MX division: **memory supply shortages for mobile, and upward trend in prices have persisted** — confirming the tight supply backdrop creating pricing power for the memory parent franchise [15].

### 5. Valuation support
- CLSA notes shares trade at **0.9x forward book vs. a 10-year average of 1.2x** — providing valuation cushion even amid near-term earnings weakness [1].
- SOTP target uses peer EV/Ebitda multiples: memory at Hynix/Micron avg, S-LSI & Foundry at 50% discount to TSMC, smartphones at 50% discount to Apple, network at Nokia/Ericsson avg, display at 20% premium to regional peers [10].

---

## BEAR CASE

### 1. HBM qualification slippage with NVIDIA is the central risk
- CLSA's stated investment risks are explicit: **"Major risks include a slower-than-expected memory demand recovery, and constant struggles/delays in HBM product qualification to Nvidia"** [3].
- As of June 2025, SEC was **still completing its HBM3E 12-Hi qualification with Nvidia**, with AMD qualification also delayed. CLSA flagged downside risk to its already conservative +40% HBM shipment growth forecast for 2025 (vs. SEC's own +100% YoY target), with **HBM4 supply potentially not commencing until mid-1H26** [4].
- 2Q25 OP was tracking **10% below consensus at KRW 6.1tn (-9% QoQ), driven by delays in HBM3E 12-Hi supply, unfavourable FX, and continued foundry losses** [1].

### 2. Foundry remains a deep, persistent loss center
- The Foundry/LSI segment represented **-18% to -19% of CLSA's segment value** in 2025 SOTP — a meaningful drag on consolidated value [8].
- Q1 25 foundry losses were ~**KRW 2.2tn**, with Q2 expected at a similar level [1]. CLSA: SEC management itself states "**the production scale at the current level is insufficient to turn the division to BEP level, and it should take some time to improve**" [7].

### 3. Memory upcycle is still cyclical — DDR4 tailwinds are limited
- 2Q25 DDR4 price spike of ~40% looked attractive, but DDR4 only represented ~10% of SEC's DRAM shipments, and SEC had already cleared the majority of its DDR4 inventory pre-2Q25 — so the optical tailwind didn't translate to ASP [1].
- HBM4 has higher technological complexity and bigger chip size, creating execution risk in supply ramp [5].

### 4. Downstream margin pressure from memory price surge
- Samsung's own Display division flags that **"rising memory prices driven by supply/demand imbalances have increased cost burdens for some manufacturers, which is expected to reduce overall set demand"** — i.e., memory strength cannibalizes MX, VD, and DA profitability [Display commentary in Q1 FY2026 call]. Confirmed: Q2 FY2026 DX division profit is guided to decline due to rising cost burdens, with mobile facing intensified component cost pressure [14].

### 5. Tariff/geopolitical overhang
- Memory restocking in 2Q25 was partly driven by tariff-related demand pull-in [bb47216d-be8b-4aec-a5ff-c83797bb7479 referenced for context]. CLSA's prior April 2025 note was explicitly titled "Tariffs clouding visibility" — geopolitical/trade-policy risk is an ongoing overhang on visibility into 2H demand sustainability.

---

## KEY DEBATE — Reconciling the Vintages

| Issue | CLSA 11-Jun-2025 view | Q1 FY2026 actual (29-Apr-2026) |
|---|---|---|
| HBM ramp | Delayed; risk to even +40% YoY [4] | First-mover on HBM4 mass production; capacity sold out [12] |
| Memory cycle | Cyclical recovery, near-term [1] | Record revenue/OP; CFO calls up-cycle structural [11][14] |
| Foundry | Persistent losses through 2H25 [7] | Double-digit YoY revenue growth; 2nm orders in pipeline [13] |
| OP margin | 2Q25 OP ₩6.1tn (-9% QoQ) [1] | Q1 FY26 OP ₩57tn at 43% margin [11] |

**Read-across**: CLSA's mid-2025 caution was warranted at the time (HBM3E delays were real), but Samsung's Q1 FY2026 print shows execution caught up — HBM4 leadership, sold-out capacity, and a record-margin print suggest the bull case has materially de-risked since CLSA's last single-stock note. The bear case now pivots from "can SEC execute on HBM?" to "can SEC sustain margin given downstream cost pressure and persistent foundry drag, and is the cycle peaking?"

---

**Sources**
[1] Samsung Electronics - O-PF (Weak 2Q but valuation support) — CLSA (11-Jun-2025) — 607961798LinqAlpha.PDF
[2] Samsung Electronics - O-PF (Weak 2Q but valuation support) — CLSA (11-Jun-2025) — Investment thesis chunk
[3] Samsung Electronics - O-PF (Weak 2Q but valuation support) — CLSA (11-Jun-2025) — Investment risks chunk
[4] Samsung Electronics - O-PF (Weak 2Q but valuation support) — CLSA (11-Jun-2025) — HBM qualifications chunk
[5] Samsung Electronics - O-PF (Treading carefully amid uncertainties) — CLSA (29-May-2025) — HBM supply chunk
[6] Samsung Electronics - O-PF (Treading carefully amid uncertainties) — CLSA (29-May-2025) — Foundry 2nm chunk
[7] Samsung Electronics - O-PF (Weak 2Q but valuation support) — CLSA (11-Jun-2025) — Foundry losses chunk
[8] Samsung Electronics - O-PF (Treading carefully amid uncertainties) — CLSA (29-May-2025) — HBM revenue table
[9] Samsung Electronics - O-PF (Treading carefully amid uncertainties) — CLSA (29-May-2025) — HBM capacity table
[10] Samsung Electronics - O-PF (Weak 2Q but valuation support) — CLSA (11-Jun-2025) — Valuation details chunk
[11] Samsung Electronics — Q1 FY2026 Earnings Call (29-Apr-2026) — CFO opening remarks
[12] Samsung Electronics — Q1 FY2026 Earnings Call (29-Apr-2026) — HBM4 commentary
[13] Samsung Electronics — Q1 FY2026 Earnings Call (29-Apr-2026) — Foundry 2nm commentary
[14] Samsung Electronics — Q1 FY2026 Earnings Call (29-Apr-2026) — 2H outlook
[15] Samsung Electronics — Q1 FY2026 Earnings Call (29-Apr-2026) — MX division memory cost commentary

## 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] **607960821LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960821LinqAlpha.PDF>
- [6] **607960821LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960821LinqAlpha.PDF>
- [7] **607961798LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961798LinqAlpha.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] **607961798LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961798LinqAlpha.PDF>
- [11] **Samsung Electronics Co., Ltd., Q1 2026 Earnings Call, 29-April-2026 9** · external
- [12] **Samsung Electronics Co., Ltd., Q1 2026 Earnings Call, 29-April-2026 9** · external
- [13] **Samsung Electronics Co., Ltd., Q1 2026 Earnings Call, 29-April-2026 9** · external
- [14] **Samsung Electronics Co., Ltd., Q1 2026 Earnings Call, 29-April-2026 9** · external
- [15] **Samsung Electronics Co., Ltd., Q1 2026 Earnings Call, 29-April-2026 9** · external

