Key Morningstar Metrics for Samsung Electronics
- : KRW 330,000Fair Value Estimate
- : ★★★Morningstar Rating
- : NoneMorningstar Economic Moat Rating
- : HighMorningstar Uncertainty Rating
Samsung’s 005930 preliminary revenue and operating margin for the June quarter stood at KRW 171 trillion and 52%, respectively, up 28% and 953 basis points sequentially. Samsung will release its full results on July 30, 2026.
Why it matters: While operating margin was broadly in line, revenue came in slightly below our forecasts by 4%. We believe this was driven by a stronger-than-expected tapering of DRAM price hikes. We estimate DRAM price hikes at 30% sequentially versus our forecast of 40%.
- We believe softer price hikes are due to a higher long-term agreements mix. As LTAs include price bands that limit volatility, we expect price hikes to taper off as more LTAs are signed. That said, DRAM prices will likely remain strong into 2028, given robust near-term AI demand and an average estimated LTA of 3 years.
- Based on the in-line profitability, we believe Samsung’s memory operating margin stood at 71%, under Micron’s 80% in its latest quarter. We believe that lower margins are due to cost headwinds from its new compensation agreement with its workers’ union, rather than a weaker product mix.
The bottom line: We maintain our fair value estimate of Samsung Electronics 005930 and will review our estimates when full earnings are issued. Shares fell 9.6% after the release, suggesting investors are concerned about Samsung’s earnings strength following softer price hikes.
- We think investors should focus on memory price resilience as a barometer for valuations rather than price delta. We continue to see near-term memory shortages given little supply growth in 2026, keeping prices robust. That said, we keep our base case of a 2029 cycle turn, driven by sharp 2027 and 2028 capacity adds.
Coming up: We expect Samsung Foundry’s performance to show sharp improvement over the next few quarters. With HBM4 base die production beginning in earnest, as well as contract wins reportedly from Google and AMD for Samsung’s advanced nodes, we expect the segment’s profitability to sharply recover.
