Written by: Rita
The market is concerned that inventory cycles have peaked, but Samsung’s management expects the supply-demand ratio in 2027 to be tighter than in 2026. Following an online meeting with Samsung Electronics’ management, Goldman Sachs reaffirmed its Buy rating and included the stock on its Conviction Buy list in a report issued on September 18, 2026. The target price for common shares is KRW 490,000, representing a 94.1% upside from the current price of KRW 252,500. The target price for preferred shares is KRW 360,000, with an 86.2% upside.
Goldman Sachs analyst Giu Lee noted in a report that Samsung’s management reaffirmed that memory supply and demand conditions will remain tight, supported by robust demand momentum, low fulfillment rates, and demand deferrals extending from 2026 into 2027. Incremental capacity will be focused on DRAM, particularly high-bandwidth memory (HBM), while capacity for other memory products will be constrained. Supply expansion for traditional DRAM faces structural limitations.
Storage supply and demand will remain tight until 2027
Unmet demand in 2026 will be carried over to 2027, with supply and demand conditions in 2027 tighter than in 2026. Long-term supply agreements provide visibility beyond 2027, and management expects favorable supply and demand conditions to persist beyond 2027. Samsung’s P4 fab will primarily produce 1c-nanometer DRAM for HBM4 and HBM4E, and the P5 fab, with its first wafer output expected in 2028, will also be DRAM-focused. For NAND, due to limited wafer fabrication space in Korea, the company will focus on process migration at its Xi’an facility.
Goldman Sachs noted that growth in bit output for both DRAM and NAND faces challenges. Traditional DRAM capacity expansion is difficult, as new capacity is primarily allocated to HBM. The trade ratio for HBM has increased generation after generation and is currently at 3 to 4 to 1, with larger chip sizes further exacerbating capacity constraints. This structural shift indicates that supply discipline in the memory industry is stronger than in previous cycles, suggesting that prices and margins are likely to remain elevated for a longer period.
Long-term agreement locks demand
The currently signed long-term supply agreement differs from previous cycles in terms of duration, scope, and enforceability, providing the company with financial stability and disciplined capital expenditure planning. Customers make substantial advance payments and deposits, with advance payments proportional to the scheduled purchase volumes, encouraging more accurate demand forecasts.
The remaining 30% to 40% of capacity is not bound by long-term agreements and will serve mobile, PC, and non-AI customers, which may offer upside potential in physical AI and edge AI. Goldman Sachs believes that the widespread adoption of long-term agreements has transformed the storage industry’s business model, shifting from spot price volatility to more predictable contract revenue. This shift benefits leading manufacturers like Samsung, enabling them to plan capacity and investments more stably.
HBM is consuming traditional DRAM production capacity.
4nm foundry capacity is extremely tight due to demand for HBM4 base chips, and the company is considering increasing 4nm capacity in South Korea. Meanwhile, new production lines for the 2nm node used in HBM5 base chips are also under evaluation. The company confirms that equipment installation at the Taylor facility has begun, specifically for orders from U.S. automotive customers, and is considering expanding capacity in the U.S. to meet future potential orders.
Goldman Sachs noted that the capacity pressure from HBM is structural. HBM chips are larger, consume more wafers, and the trade ratio for each new HBM generation continues to rise. Even if Samsung increases DRAM capacity, most of the additional capacity will be absorbed by HBM, limiting supply growth for traditional DRAM. This trend supports sustained high memory prices.
MX department priority market share
Despite short-term operational losses, Samsung's MX division will prioritize market share in key regions. The company expects financial conditions to worsen further before improving, due to rising storage cost pressures. Regarding foldable phones, the company holds a positive view of new entrants, believing they will enhance consumer awareness and validate the foldable form factor.
Goldman Sachs believes that MX's strategy is to sacrifice short-term profits for long-term market position. Rising storage costs are putting pressure on the mobile business's profitability, but as a storage supplier, Samsung can benefit from rising storage prices, partially offsetting the pressure on its mobile business. This vertical integration advantage is more pronounced during storage upcycles.
Shareholder returns will be decided at year-end.
Samsung stated that it is evaluating share repurchases and dividends, with a final decision expected after the year-end financial results are finalized. Management reiterated that holdings in affiliated companies will not be a primary factor in determining shareholder return policies. Goldman Sachs believes that clarity on shareholder return policies could serve as a potential catalyst for the stock price.
Goldman Sachs' target prices are based on a 2026–2027 EV/EBITDA segment valuation. The target price for common shares is KRW 490,000, and for preferred shares, KRW 360,000, reflecting a 27% discount on preferred shares. Downside risks include a severe deterioration in storage supply and demand, increased competition in HBM, and expanding losses in the contract manufacturing business.
If supply and demand conditions in 2027 are tighter than in 2026, Samsung's memory business will enter a longer upward cycle—will the short-term losses in its mobile business be fully offset by memory profits?
Disclaimer
This article is a compilation and interpretation by Chaoxiang Research of a third-party brokerage research report (Goldman Sachs, September 18, 2026), combined with publicly available market information. The ratings, price targets, earnings forecasts, and related judgments cited herein reflect the views of the brokerage's analysts and represent the position of their respective institution only; they do not reflect the views of Chaoxiang Research nor constitute any investment advice.
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