Meritz Securities analyst Kim Sunwoo said the market has materially misread the fundamentals of Samsung Electronics and SK Hynix, arguing that investors should not turn bearish on the semiconductor sector based on fragmented information. Addressing market talk that SK Hynix may have cut prices to secure long-term supply deals with major technology companies, Kim said the arrangement should be viewed as a strategic investment aimed at locking in future demand from generative AI and AI data centers, rather than as a simple pricing sacrifice. He added that the company is expanding its mid- to long-term customer base through joint ventures and other partnerships. Kim expects DRAM demand fulfillment in the second half of this year to come in at just 75% to 80%, with the figure potentially falling into the 60% range next year. Even when calculated only against real end-user demand, fulfillment would be around 70%, suggesting that supply shortages could deepen. He also said Samsung’s share buybacks, cancellations and dividends, along with a possible special dividend from SK Hynix, could help ease market concerns. In his view, both companies are now seriously undervalued and excessively corrected.
On July 17, Meritz Securities analyst Kim Sunwoo said the market has excessively misunderstood the fundamentals of Samsung Electronics and SK Hynix, and that it is not the time to make a short-term bearish call on the semiconductor sector based on fragmentary information.
Responding to market chatter that SK Hynix may have offered lower prices to win long-term supply agreements with major technology companies, Kim said the arrangement is not simply a price concession. He described it as a strategic investment to lock in demand early from the generative AI and AI data center markets. He also said the company is widening its medium- and long-term customer base through joint ventures and cooperative partnerships.
Kim expects DRAM demand fulfillment in the second half of this year to be only 75% to 80%, and said the figure could fall further into the 60% range next year. Even if measured only against real end demand, fulfillment would still be around 70%, which in his view means supply shortages are likely to deepen.
He added that Samsung Electronics’ share buybacks, share cancellations and dividends, as well as a possible special dividend from SK Hynix, could help ease market concerns. Kim said both companies are currently in a state of severe undervaluation and excessive correction.
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