Japan’s Nomura Securities maintained its “Buy” rating on South Korea’s Samsung Electronics (005930.KS) and SK Hynix (000660.KS), setting target prices of ₩670,000 (approximately $490) and ₩4.7 million (approximately $3,500), respectively. The brokerage assessed that both stocks have fallen roughly 37% from their peaks and are trading at an average of just 3 times projected 2027 price-to-earnings (P/E) ratios — a level it considers severely undervalued.
In a report released on the 4th, Nomura Securities stated, “The memory market is currently experiencing unprecedented demand strength driven by the artificial intelligence (AI) investment cycle, while supply remains woefully inadequate.” The firm analyzed that “global memory production capacity would need to double to 7.2 million wafers per month within four years, and triple to 11 million wafers per month within six years, to meet the exploding demand.”
The brokerage noted that while Chinese manufacturers are aggressively expanding capacity, their impact on overall supply-demand dynamics remains negligible, and it expects the supply shortage to persist through 2028. Amid the severe supply crunch, major customers including Big Tech companies are signing five-year long-term contracts, accepting price ceilings up to 20% above current levels.
Nomura Securities explained, “The 20–30% prepayments and stringent penalty clauses embedded in these agreements provide Samsung Electronics, SK Hynix, and Micron with an unprecedented level of earnings visibility and stability compared to the past.” The firm assessed that new long-term supply agreements (LTAs) are fundamentally transforming the industry’s business model into a more predictable and stable structure.
Despite mounting memory price pressure, customers are largely accepting unfavorable terms. The brokerage reported that some customers are reducing memory capacity per device or scaling back finished product output due to allocation shortfalls.
Korean Won Strength Poses Near-Term Risk
However, Nomura Securities identified the strengthening Korean won as a near-term risk factor. South Korean memory companies receive payment in U.S. dollars but incur a significant portion of their costs (approximately 20% of revenue) in Korean won. The firm explained that a 10% appreciation in the won would create a short-term earnings headwind of roughly 12% to operating profit.
Accordingly, Nomura lowered its Q3 operating profit forecast for SK Hynix from ₩86 trillion (approximately $63.5 billion) to ₩77 trillion (approximately $56.8 billion), reflecting the impact of won appreciation. Samsung Electronics’ operating profit was projected at ₩107 trillion (approximately $79.0 billion). The firm noted, however, that the currency headwind is expected to be offset by sharply rising memory average selling prices (ASP).
Nomura Securities emphasized that Big Tech companies’ actual capital expenditure capacity is far stronger than market concerns suggest, and that the combination of solid memory market trends and aggressive shareholder return policies should drive a full-scale re-rating of both companies’ stock prices.
Samsung and SK Hynix Hold Top Two Spots in Q2 NAND Market
Meanwhile, the global NAND Flash market continues its steep growth trajectory, fueled by surging prices. According to market research firm Counterpoint Research, global NAND market revenue grew 70% quarter-over-quarter in Q2, while NAND prices rose 55% during the same period. This marks two consecutive quarters of growth following Q1.
By vendor market share, Samsung Electronics led with 28%, down 1 percentage point from 29% in the previous quarter. SK Hynix ranked second with 19%. Micron climbed to third place, raising its share from 13% to 15%. Kioxia and China’s YMTC tied for fourth at 14% each. SanDisk held fifth place at 11%, down 2 percentage points from the prior quarter.
Counterpoint Research analyzed that this growth was almost entirely attributable to contract price increases rather than actual shipment volume growth. As demand for high-capacity NAND from enterprise and hyperscale data centers building AI infrastructure has exploded, manufacturers are concentrating production capacity on high-margin enterprise products. This has tightened supply of consumer SSDs, intensifying upward pressure on consumer prices.
YMTC’s rise is particularly notable. The Chinese manufacturer is rapidly filling the void in the mid-range and consumer markets left by major international players focusing on high-margin enterprise orders, expanding its market share from 11% in the year-ago period to 14% in Q2 this year.
Given that new NAND production capacity takes years to bring online, market consensus leans toward NAND Flash prices reaching genuine stabilization only by 2027, as long as AI-driven demand remains intact.