Samsung Electronics expects its DRAM production to reach nearly 8 million wafers (semiconductor substrates) this year, based on wafer input. This would be an increase of about 5% from 7.6 million wafers last year, with production mainly concentrated at its Pyeongtaek plant, and the average quarterly output will also exceed 2 million wafers for the first time.
However, production may fall short of expectations due to a temporary decrease in capacity during the transition to 10nm sixth-generation DRAM (1c) technology. As current production is far from sufficient to compensate for the global memory shortage plaguing the market, the industry anticipates that the upward trend in high-bandwidth memory (HBM) and DRAM prices will continue.
Omdia data
According to data obtained by North Korean financial media from market research firm Omdia on the 14th, Samsung Electronics' DRAM wafer production this year is expected to reach 7.93 million wafers, an increase of approximately 5% compared to last year (7.59 million wafers). SK Hynix's DRAM production is also expected to increase from 5.97 million wafers last year to approximately 6.48 million wafers this year, an increase of about 8%. As production at its Cheongju M15X plant (which has already undergone capacity expansion investment) will gradually commence in the second half of this year, its growth rate is expected to be slightly higher than Samsung Electronics'. Micron expects its annual production to be approximately 3.6 million wafers, flat compared to last year.
Industry insiders predict that the global DRAM supply shortage will be difficult to alleviate until Samsung Electronics' P4 plant in its Pyeongtaek campus begins production. Even with accelerated construction of the P4 plant, both Samsung Electronics insiders and outsiders believe that production is likely to begin after 2027. SK Hynix will only be able to significantly increase its production capacity after its Yongin semiconductor cluster is fully operational.
Although the three major DRAM manufacturers—Samsung Electronics, SK Hynix, and Micron—will have higher production capacity this year than last year, there is still a significant gap between supply and market demand. According to data from KB Securities, the demand fulfillment rate for DRAM customers is only around 60%, and the fulfillment rate for server DRAM is even lower than 50%. In other words, supply can only meet half of the demand.
TrendForce predicts
Market research firm TrendForce predicts that DRAM contract prices will rise 55% to 60% in the first quarter of this year compared to the previous quarter. During the same period, NAND flash memory contract prices are also expected to rise 33% to 38%, driven by surging server demand.
Meanwhile, DRAM suppliers are prioritizing advanced process nodes and new production facilities for server and high-bandwidth memory (HBM) products to meet the growing demand from artificial intelligence (AI) servers. Major buyers such as PC and smartphone manufacturers are also facing difficulties, with them only able to obtain about half of their required memory.
PC demand is slowing due to declining laptop shipments and lower configurations, but PC DRAM prices are expected to rise sharply in the first half of the year as DRAM manufacturers cut supplies to PC manufacturers and module suppliers. Mobile DRAM is also facing a continued shortage, with contract prices expected to surge in the coming quarters. Server DRAM prices are projected to rise by more than 60% in the first quarter compared to the previous quarter.
UBS raised its target price for SK Hynix to 1 million won
Global investment bank UBS has significantly raised its target price for SK Hynix from 853,000 won to 1 million won. UBS's target price valuation is the highest among domestic and international securities firms, and it predicts that SK Hynix's operating profit this year will exceed 150 trillion won.
According to a report by the financial investment industry on January 13, UBS released a report titled "SK Hynix's Huge Profit Potential, Target Price 1 Million Won (PT to Won1m)," highlighting the company's significant profit growth potential. UBS specifically listed this report as a "key rating" within the company, indicating its strategic significance far beyond simple investment advice.
UBS expects SK Hynix's DRAM business operating profit margin to reach 82% in the fourth quarter of this year, significantly exceeding the historical high of 65% set in the third quarter of 2018. While high-bandwidth memory (HBM) is receiving much attention, general-purpose memory is expected to become a key profit driver in 2026-2027. UBS expects the upward trend in DDR contract prices to continue into the first quarter of next year, while the upward trend in NAND flash memory prices may continue into the third quarter of this year.
SK Hynix's operating profit forecast for this year is 150.2 trillion won, a 211% increase from its previous forecast. This forecast is 52% higher than the market consensus of 99 trillion won. Furthermore, SK Hynix's forecast surpasses Morgan Stanley's recent forecast of 148 trillion won, making it the most optimistic forecast among domestic and international securities firms. Free cash flow (FCF) is also expected to increase significantly, reaching 75 trillion won this year and 98 trillion won next year.
UBS stated that "the memory semiconductor industry is in an 'unprecedented upward cycle'," and that "SK Hynix's share price should be reassessed to reflect fundamental changes."
UBS Group raised its target price for Samsung Electronics from 154,000 won to 172,000 won. The bank also raised its operating profit forecast for Samsung Electronics this year from 135 trillion won to 171 trillion won, 32% higher than the market consensus of 130 trillion won.
The assessment believes that Samsung Electronics' share price may continue to rise due to the significant upward revision of profit forecasts, the market's reassessment of the duration of the memory cycle, and improved long-term profitability.
Source: Suggested from bizchosun
