LS Securities on the 31st made contrasting target price adjustments for South Korea’s Samsung Electronics and SK Hynix. Samsung Electronics’ target price was raised 12.5% from ₩400,000 to ₩450,000 (approximately $330), while SK Hynix was cut roughly 27% from ₩3.3 million to ₩2.4 million (approximately $1,700). Buy ratings were maintained on both stocks.

The backdrop to this adjustment is the shifting competitive landscape around sixth-generation High Bandwidth Memory (HBM4). Samsung Electronics has secured HBM4 mass production capability faster than expected, reducing the discount factor that has been applied to its share price, while SK Hynix’s premium from its dominant supply position could shrink.

Jung Woo-sung, an analyst at LS Securities, cited industry data showing Samsung Electronics’ HBM4 share of total HBM shipments climbed from roughly 5% in the first quarter to approximately 35% in the second quarter. Even during this rapid ramp-up of the new product, second-quarter HBM blended yield was estimated to have improved by more than 5 percentage points quarter-over-quarter.

“Unlike the early HBM3E mass production phase, Samsung appears to have secured relatively higher manufacturability with HBM4,” he said, raising HBM shipment volume and profitability forecasts. If yields improve further as HBM4’s share grows, the pace at which HBM revenue growth translates into overall profitability improvement for Samsung Electronics could accelerate.

Samsung Electronics’ HBM business has historically acted as a valuation discount factor relative to competitors due to customer qualification delays and low manufacturability. However, with HBM4 shipment share expansion and yield improvement now confirmed simultaneously, LS Securities expects this discount factor to gradually dissipate. If actual shipment volume growth is confirmed going forward, the firm left open the possibility of simultaneous upward revisions to HBM earnings estimates and valuation re-rating.

Samsung Electronics’ recovery poses a headwind for SK Hynix. LS Securities maintained its outlook for SK Hynix’s HBM demand and shipment volume growth. The issue is that Samsung’s increased HBM4 supply raises the likelihood of major customers diversifying their supplier base.

“While we maintain a positive view on SK Hynix’s HBM shipment growth and mid-to-long-term demand,” Jung said, “if the competitor’s HBM4 shipment expansion and manufacturability improvement are confirmed, the likelihood of major customers diversifying suppliers will increase.” He added, “This represents a normalization of the competitive landscape among suppliers rather than a slowdown in HBM market growth itself.”

LS Securities lowered its HBM operating margin forecast for SK Hynix next year from approximately 80% to around 60%, projecting profitability similar to this year’s levels. The logic: if HBM operating margins were to rise to 80%, major customer Nvidia would need to raise product prices further to maintain its own 75% gross margin, which could erode the server investment capacity of Big Tech companies already burdened by rising memory prices.

The brokerage views an HBM operating margin of around 60% as a “Goldilocks” level that satisfies customers, memory suppliers, and the sustainability of AI investment simultaneously. However, it did not rule out the possibility of HBM profitability rising again through cost reductions from future yield improvements.

Key forecasts for the two companies presented by LS Securities are as follows.

CategorySamsung ElectronicsSK HynixTarget Price₩400,000 → ₩450,000₩3.3M → ₩2.4MRatingBuy maintainedBuy maintained2026 Revenue Forecast₩752.1 trillion (approx. $545.9 billion)₩355.2 trillion (approx. $257.8 billion)2026 Operating Profit Forecast₩395.1 trillion (approx. $286.8 billion)₩266.3 trillion (approx. $193.3 billion)2027 Revenue Forecast₩1,100.9 trillion (approx. $799.0 billion)₩610 trillion (approx. $442.7 billion)2027 Operating Profit Forecast₩664.5 trillion (approx. $482.3 billion)₩465.8 trillion (approx. $338.1 billion)2028 PBR Trading Range1.0–1.3×1.1–1.4x

Note: PBR expansion upside was presented at 1.5x for Samsung Electronics and 1.6x for SK Hynix.

Jung emphasized that the target price cut does not signal expectations of HBM demand slowdown or an end to the memory upcycle. Rather, it reflects a lower probability assigned to SK Hynix’s previously anticipated HBM excess profitability materializing, as well as the potential for some reduction in the supplier concentration premium due to Samsung Electronics’ HBM4 entry.

Meanwhile, LS Securities offered a somewhat conservative view on further memory price upside. While memory supply shortages are expected to persist over the medium-to-long term, the firm believes additional price upside is more limited than before, given that memory now accounts for a larger share of server budgets due to prior price increases. Accordingly, rather than expecting sustained multiple expansion from earnings growth alone after HBM4 competitiveness recovery, it presented a base trading range of 1.0–1.3x price-to-book ratio (PBR) on a controlling interest basis for 2028.

If next-generation AI accelerator shipments and new demand expectations strengthen, the PBR upside could extend to around 1.5x. “The medium-to-long-term stock price direction will be more sensitive to the pace of HBM4 supply expansion and new AI demand sources than to memory prices themselves,” Jung concluded.