---
endpoint: analytics
pattern: Technology
status: done
latency_ms: 348549
conversation_id: f52b8172-4000-42de-904a-cc6563713d29
citations: 22
created: 2026-05-31 21:22:36Z
---

# Provide a one‑year narrative of Samsung Electronics, outlining how business performance, market conditions, and company actions shaped investor sentiment and valuation.

# Samsung Electronics — One-Year Narrative (June 2025 – May 2026)

## Executive arc

Twelve months ago, Samsung Electronics (005930-KR) traded as the "broken giant" of the AI cycle — buyside punished it for missing the HBM ramp, foundry losses persisted, and CLSA flagged the stock at **0.9x forward book versus a 10-year average of 1.2x**, while still reiterating Outperform on valuation alone [19]. Twelve months later, it has executed the single largest narrative reversal of any Asian mega-cap: trough OPM in Q2 2025 → record quarterly OP of **KRW 20.1tn** by Q4 2025 [6] → highest-ever quarterly revenue and OP in Q1 2026 [9], a major M&A spree, a HBM4 mass-production lead, and a 52-week share-price gain of roughly **+125%** by end-2025 [12] that extended into a KRW 270k+ range by mid-May 2026 [15]. The narrative below traces how that re-rating came to be.

---

## I. Summer 2025: The Trough — Valuation Support Without a Catalyst

**Entry conditions (May–June 2025)**

Going into mid-2025, the bear case on Samsung was structural, not cyclical:

- **HBM execution gap.** CLSA flagged that "SEC is still in the process of completing its HBM3E 12-Hi qualification with Nvidia," and that AMD qualification "also seems to have been delayed" — putting downside risk on the company's own +100% YoY HBM shipment target and pushing potential HBM4 customer supply out to "mid-1H26" [22]. SK Hynix was already running the table.
- **Foundry losses unresolved.** The non-memory drag persisted.
- **Q2 2025 OP set to miss consensus by ~10%** on HBM3E supply delays, KRW strength, and the foundry hole [19].
- **One offsetting positive:** the management team told CLSA in late May 2025 that "memory demand from consumer devices has been strong in 1H, and SEC expects an acceleration in demand from AI and non-AI servers in 2H since 1Q capex run rate of major hyper scalers has been below their annual guidance" [20] — a thesis investors initially discounted.

**The China overhang.** In late June 2025, the *Wall Street Journal* reported that the US Department of Commerce was reconsidering the indefinite waivers permitting US memory-equipment exports to Samsung and SK Hynix fabs in China — a move that "is bound to raise concern over the long-term sustainability of Korean suppliers' production activities in China," though paradoxically, "if any production disruptions were to happen it might lead to even tighter supply of memory, especially DRAM" [21]. The market parsed this both as a geopolitical risk and as a supply-tightening accelerant — net positive for memory prices.

**Q2 2025 earnings (reported July 30, 2025) confirmed the trough.** The DS division "recognized inventory value adjustments in the Memory Business and booked one-off cost related to the impacts of export restrictions related to China in the non-Memory business," driving "operating margin contracted by 2.2 percentage points, settling at 6.3%" [1]. Management's tone, however, marked the inflection: "we are truly preparing for a turnaround in the second half" [2].

**Capital-return signal.** Alongside Q2 results, Samsung accelerated its **KRW 10 trillion repurchase program**, committing to complete it on October 8, 2025 — "ahead of the original one-year target of November 14" — with explicit guidance that "in the near future, we'll determine the appropriate timing to cancel the repurchased shares aimed at enhancing shareholder value" [3]. This was the moment buyback skeptics flipped: Samsung was signalling balance-sheet conviction at trough earnings.

---

## II. Autumn 2025: The Turnaround Becomes Visible

**Q3 2025 (reported October 29, 2025).** The early-recovery quarter:

- **Memory demand inflected from "strong" to "structural."** Management stated bluntly that the company was "currently receiving memory demand for the year of 2026 and is much stronger and faster than usual" — with expectations that supply constraints would intensify across DRAM, NAND, and HBM, and that SSD adoption replacing nearline HDDs (then in short supply) was tightening the cycle further [4].
- **Foundry — the perennial pain point — turned.** "Profits saw a significant improvement due to a reduction in one-off cost, better line utilization, and the realization of cost efficiencies" [5], with US export controls on China still a headwind but offset by US and memory-related customer wins.
- **2026 guide framework set.** Management told analysts "we expect the Memory business to be fairly strong into 2026," foreshadowing a CapEx step-up and a flexible response to AI demand.

The market re-rated the stock through the autumn as confirming data points stacked: hyperscaler CapEx surged through 2H25, conventional DRAM prices broke higher on supply discipline, and Korean broker channel checks reported HBM3E qualification progress with Nvidia.

---

## III. December 2025: The Re-rating Crystallises

By year-end 2025, the narrative had completely flipped. South Korea posted "**the best annual gain this millennia on AI surge**" [17], and Samsung closed December trading at **KRW 119,150 — a 52-week gain of +126.3%** [12]. Three concurrent catalysts crystallised the re-rating:

1. **HBM3E pricing power.** Samsung and SK Hynix reportedly **raised HBM3E prices by 20% for 2026 deliveries** [16] — direct proof of supply tightness flowing into margin.
2. **HBM4 acceleration.** Both Korean memory makers reportedly pulled HBM4 production into early 2026.
3. **Strategic M&A pivot to "AI-adjacent platforms."** In a single week (late December 2025), Samsung's affiliate HARMAN agreed to **acquire ZF Group's ADAS business at an enterprise value of €1.5B (KRW 2.618tn)** [14] — the largest of a four-deal package management later catalogued: "We also secured new growth drivers through strategy acquisitions, including FläktGroup in HVAC, ZF in ADAS, Xealth in digital healthcare and Masimo's audio business" [7]. This shifted Samsung's narrative from "memory cyclical" to "AI-platform conglomerate," touching data-center cooling (FläktGroup HVAC), automotive AI (ZF ADAS), connected healthcare (Xealth), and premium audio (Masimo).

---

## IV. Q4 2025 Earnings (Reported January 28, 2026): The Print That Validated the Re-rating

The Q4 print was historic:

- **Operating profit of KRW 20.1 trillion** — a new quarterly high — "up KRW 7.9 trillion from the previous quarter. Operating margin also increased, rising 7.3 percentage points sequentially to 21.4%," with the DS division more than compensating for DX-segment softness on "robust improvements in memory profitability" [6].
- **HBM4 in final qualification.** Management told the market they "have shipped samples based on HBM4 last quarter and have begun technical discussions and we'll be proceeding with partial commercialization of select products at the HBM4E stage" [8] — confirming the company had closed the HBM gap and was now positioned to leapfrog at the HBM4 generation.
- **Tesla foundry win disclosed.** Analyst questions about "further major customer wins after the Tesla order last summer" confirmed that a major 2-nm foundry customer had been locked in during summer 2025 — a structural validation of the foundry business that had been bleeding cash one year earlier.

---

## V. Q1 2026 Earnings (Reported April 29, 2026): All-Time Records, Capital Return Crystallised

The Q1 2026 print extended the re-rating to its logical endpoint:

- **Highest-ever quarterly revenue AND operating profit**, driven by "continued AI technology innovations and our proactive market response" amid "the challenging macro environment" [9].
- **HBM4 production lead established.** Management noted Samsung was the "first in the industry to commence HBM4 mass production and shipments" in Q1 2026 [11] — completing the inversion of the mid-2025 narrative where Samsung was "the HBM laggard."
- **Aggressive capital return capped off.** The board canceled previously-repurchased shares with **"the valuation of the canceled shares amounts to approximately KRW 14.6 trillion"** [10] — converting the prior buyback into permanent EPS accretion.

Notably, the Q1 print was not without tension: rising memory prices began squeezing the in-house MX (smartphone) and Display businesses (the DX side is now a victim of DS pricing strength), and labour talks over a profit-sharing bonus tied to record results were carried unrecognised pending negotiations.

---

## VI. May 2026: AI Capacity Race and Labour Friction

The final weeks of the 12-month window encapsulated the new reality — Samsung as a constrained-capacity AI infrastructure stock:

- **Capacity race public.** DigiTimes reported on May 14, 2026 that "AI boom has Samsung Electronics, SK Hynix in unprecedented race to expand capacity" [13]. South Korea's April ICT exports printed **+125.9% YoY at $42.71B** — proof of the memory-driven volume surge running through the macro print [18].
- **Profit-sharing labour clash.** With Q4/Q1 records driving employee bonus expectations, talks broke down and Samsung sought (and partially won) a court injunction in Suwon District Court to limit production impact from a planned strike; wage talks ultimately collapsed late on May 19 ahead of a planned May 21 walk-out, "adding to the week's pressure on the Kospi" [15]. The share price slid from a mid-May high of KRW 286,500 to KRW 266,500 by May 20 — the first material drawdown of the year.
- **Eyewear partnership.** A late-May tie-up between Samsung, Google, and Warby Parker on AI-enabled eyewear (Gemini + Android XR) signalled the next vector of consumer monetisation.

---

## VII. The Valuation Round-Trip

| Period | Reference Price | Valuation Anchor | Sentiment |
|---|---|---|---|
| **Jun 2025** | ~KRW 55–60k area (CLSA TP cohort, 2Q preview) | **0.9x fwd book** vs. 10-yr avg 1.2x [19] | Trough / "value with no catalyst" |
| **Late Jul 2025 (Q2 print)** | OPM 6.3% — trough quarter [1] | KRW 10tn buyback announced/accelerated [3] | Inflection signal |
| **Oct 2025 (Q3 print)** | Foundry losses narrowing [5]; 2026 memory tightness articulated [4] | Multiple expansion begins | Cyclical confirmation |
| **Dec 26, 2025** | **KRW 116,500 (+122.5% 52-wk)** [12] | HBM3E +20% pricing locked in for 2026 [16] | "AI-infrastructure" re-rating |
| **Jan 28, 2026 (Q4 print)** | OP KRW 20.1tn / OPM 21.4% [6]; M&A pivot completed [7]; Tesla foundry win | Re-rating validated by print | Best-quarter-ever |
| **Apr 29, 2026 (Q1 print)** | All-time highs in rev/OP [9]; HBM4 mass-production lead [11]; KRW 14.6tn share cancellation [10] | Capital-return optionality realised | Peak narrative |
| **May 18–20, 2026** | KRW 286,500 → 266,500 [15] | Strike risk + valuation digestion | First drawdown |

The trajectory traces a textbook three-phase re-rating: (1) trough buyback signal in Q2 2025 → (2) cyclical confirmation in Q3 2025 → (3) AI-infrastructure secular re-rating from Q4 2025 onward. The book multiple has effectively migrated from ~0.9x to a level the market now treats as an AI-infrastructure platform stock rather than a memory-cyclical commodity.

---

## VIII. What Shaped Sentiment — Synthesised

**Business performance**
- DS-led recovery: Memory operating leverage drove the DS division from "inventory adjustments + China export restriction one-offs" [1] in Q2 2025 to the KRW 20.1tn OP record in Q4 2025 [6].
- Foundry inflection: Loss reduction visible in Q3 [5], 2-nm Tesla win acknowledged in Q4, "double-digit YoY revenue growth centered on advanced nodes" guided.
- DX squeeze: Smartphone and Display margins compressed in Q1 2026 as in-house memory prices rose — a high-quality problem confirming the DS pricing power.

**Market conditions**
- Hyperscaler CapEx acceleration through 2H25, validated by Micron's June 2025 readthrough.
- DDR4 phase-out + DDR5/HBM transition + HBM4 production complexity = structural memory undersupply through 2026 [4].
- HBM3E +20% price hike for 2026 deliveries [16] — direct pricing-power evidence.
- Korean macro tailwind: ICT exports +125.9% YoY in April 2026 [18]; KOSPI's best annual gain this millennium [17].

**Company actions**
- **Capital return:** KRW 10tn buyback completed Oct 8, 2025 [3]; KRW 14.6tn share cancellation announced Q1 2026 [10].
- **M&A:** FläktGroup (HVAC), ZF Group ADAS (€1.5B/KRW 2.618tn) [14], Xealth, Masimo audio — pivoting beyond commodity memory [7].
- **HBM trajectory:** From "lagging in HBM3E 12-Hi qualification" [22] in June 2025 to "first in the industry to commence HBM4 mass production" [11] in Q1 2026 — the single most important operational reversal of the year.
- **Foundry:** Tesla 2-nm win locked in summer 2025; 1.4-nm progress communicated; foundry-memory packaging turnkey strategy articulated.

**Investor sentiment & valuation**
- Sentiment inflected from "broken Korean conglomerate trading at sub-book" to "AI-infrastructure platform with capacity scarcity" — driving the 52-week share gain to +126% by year-end 2025 [12].
- The May 2026 labour clash is the first signal that profit-sharing expectations from employees and downstream BoM cost pressure on Samsung's own MX/DX divisions are the most credible bear cases now — i.e., bear cases have rotated from "is Samsung a real AI beneficiary?" to "how does Samsung distribute the spoils?"

---

## Caveat on internal research vintage

CLSA's internal research archive on Samsung (organization scope `b152baa5-...`) extends through **June 25, 2025**. The deep-internal commentary above (CLSA TPs, HBM3E qualification status, 0.9x-book anchor) is anchored to that vintage [19][22][20][21]. Everything from July 2025 onward is reconstructed from corporate earnings transcripts and StreetAccount news, not internal notes.

---

**Sources**
[1] Samsung Electronics Q2 2025 Earnings Call — 30 July 2025
[2] Samsung Electronics Q2 2025 Earnings Call — 30 July 2025
[3] Samsung Electronics Q2 2025 Earnings Call — 30 July 2025
[4] Samsung Electronics Q3 2025 Earnings Call — 29 October 2025
[5] Samsung Electronics Q3 2025 Earnings Call — 29 October 2025
[6] Samsung Electronics Q4 2025 Earnings Call — 28 January 2026
[7] Samsung Electronics Q4 2025 Earnings Call — 28 January 2026
[8] Samsung Electronics Q4 2025 Earnings Call — 28 January 2026
[9] Samsung Electronics Q1 2026 Earnings Call — 29 April 2026
[10] Samsung Electronics Q1 2026 Earnings Call — 29 April 2026
[11] Samsung Electronics Q1 2026 Earnings Call — 29 April 2026
[12] StreetAccount — Asian 52-week highs (26 Dec 2025)
[13] DigiTimes via StreetAccount — AI boom Samsung/SK Hynix capacity race (14 May 2026)
[14] StreetAccount — M&A Summary, Week of 22-Dec (HARMAN/ZF ADAS) (29 Dec 2025)
[15] StreetAccount — Samsung wage talks breakdown (20 May 2026)
[16] Digitimes via StreetAccount — HBM3E +20% pricing for 2026 (24 Dec 2025)
[17] StreetAccount — South Korea best annual gain on AI surge (30 Dec 2025)
[18] StreetAccount — South Korea April ICT exports +125.9% y/y (14 May 2026)
[19] CLSA — Samsung Electronics - O-PF (Weak 2Q but valuation support) — 607961798LinqAlpha.PDF (11 Jun 2025)
[20] CLSA — Samsung Electronics - O-PF (Treading carefully amid uncertainties) — 607960821LinqAlpha.PDF (29 May 2025)
[21] CLSA — Korea Memory sector outlook (Potential restrictions on China fabs) — 607962512LinqAlpha.PDF (22 Jun 2025)
[22] CLSA — Samsung Electronics - O-PF (Weak 2Q but valuation support) — 607961798LinqAlpha.PDF (11 Jun 2025)

## Citations

- [1] **CORRECTED TRANSCRIPT: Samsung Electronics Co., Ltd.(005930-KR), Q2 2025 Earnings Call, 30-July-2025 9:00 PM ET** · external
- [2] **CORRECTED TRANSCRIPT: Samsung Electronics Co., Ltd.(005930-KR), Q2 2025 Earnings Call, 30-July-2025 9:00 PM ET** · external
- [3] **CORRECTED TRANSCRIPT: Samsung Electronics Co., Ltd.(005930-KR), Q2 2025 Earnings Call, 30-July-2025 9:00 PM ET** · external
- [4] **Samsung Electronics Co., Ltd., Q3 2025 Earnings Call, 29-October-2025 9** · external
- [5] **Samsung Electronics Co., Ltd., Q3 2025 Earnings Call, 29-October-2025 9** · external
- [6] **Samsung Electronics Co., Ltd., Q4 2025 Earnings Call, 28-January-2026 8** · external
- [7] **Samsung Electronics Co., Ltd., Q4 2025 Earnings Call, 28-January-2026 8** · external
- [8] **Samsung Electronics Co., Ltd., Q4 2025 Earnings Call, 28-January-2026 8** · external
- [9] **Samsung Electronics Co., Ltd., Q1 2026 Earnings Call, 29-April-2026 9** · external
- [10] **Samsung Electronics Co., Ltd., Q1 2026 Earnings Call, 29-April-2026 9** · external
- [11] **Samsung Electronics Co., Ltd., Q1 2026 Earnings Call, 29-April-2026 9** · external
- [12] **StreetAccount Summary: Asian stocks reaching new 52-week highs/lows (66 total)** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4509598&_doc_date=2025-12-26&_doc_product=SA>
- [13] **AI boom has Samsung Electronics, SK Hynix in unprecedented race to expand capacity - DigiTimes** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4679987&_doc_date=2026-05-14&_doc_product=SA>
- [14] **StreetAccount M&A Summary: Week of 22-Dec** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4509707&_doc_date=2025-12-29&_doc_product=SA>
- [15] **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>
- [16] **Samsung Electronics and SK Hynix reportedly raise HBM3E prices by 20% for 2026 deliveries - Digitimes** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4509383&_doc_date=2025-12-24&_doc_product=SA>
- [17] **South Korea markets post best annual gain this millennia on AI surge** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4510485&_doc_date=2025-12-30&_doc_product=SA>
- [18] **South Korea reports April ICT exports $42.71B, +125.9% y/y** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4679433&_doc_date=2026-05-14&_doc_product=SA>
- [19] **607961798LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961798LinqAlpha.PDF>
- [20] **607960821LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960821LinqAlpha.PDF>
- [21] **607962512LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962512LinqAlpha.PDF>
- [22] **607961798LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961798LinqAlpha.PDF>

