LS Securities raised its target price for Samsung Electronics while sharply lowering the target for SK hynix. The firm said Samsung Electronics is regaining competitiveness as it secures mass-production capability for HBM4 (6th-generation high-bandwidth memory) faster than expected.
For Samsung Electronics, the discount factor that had applied to HBM (high-bandwidth memory) is diminishing, while for SK hynix, the premium enjoyed from a dominant supply position could decline.
On the 31st, Jeong Woo-seong, an analyst at LS Securities, raised the target price for Samsung Electronics by 12.5% to 450,000 won from 400,000 won. The investment rating was kept at "buy." The previous session's closing price was 257,500 won.
By contrast, the target price for SK hynix was cut about 27% to 2.4 million won from 3.3 million won. The investment rating also remained "buy." The previous session's closing price for SK hynix was 1,653,000 won.
The crux is the shifting competitive landscape in HBM4. Samsung Electronics received assessments that concerns about mass-production capability, which had been a drag, are easing as HBM4 shipments expand and Production yield improves at the same time.
According to LS Securities, HBM4 accounted for about 5% of Samsung Electronics' total HBM shipments in the first quarter of this year and rose to about 35% in the second quarter. Even as the share of the new product expanded rapidly, the second-quarter HBM mixed Production yield was estimated to have improved by more than 5 percentage points from the prior quarter.
Jeong said that unlike the early mass production of HBM3E, Samsung appears to have secured relatively high mass-production capability with HBM4, and raised forecasts for HBM shipments and profitability. The analyst added that if Production yield further rises as the HBM4 share expands, the pace at which HBM revenue growth translates into overall profitability improvement for Samsung Electronics could also accelerate.
Samsung Electronics' HBM business had served as a valuation discount factor versus competitors due to customer certification delays and low mass-production capability. However, LS Securities said that with HBM4 shipment expansion and Production yield improvement confirmed simultaneously, this discount factor could gradually disappear. If actual shipment increases are confirmed going forward, upward revisions to HBM profit estimates and a valuation re-rating could occur at the same time.
Samsung Electronics' recovery, conversely, weighed on SK hynix. LS Securities maintained its outlook for SK hynix's HBM demand and shipment growth. The issue is that as Samsung's HBM4 supply increases, major customers are more likely to diversify their sources.
In other words, rather than the HBM market deteriorating, the "supplier premium" SK hynix has enjoyed could normalize. The firm also projected that factors driving SK hynix's stock price will shift from overall HBM demand to how much it can maintain technological superiority in next-generation products and a high share within major customers.
Accordingly, LS Securities cut its forecast for SK hynix's 2027 HBM operating margin to around 60% from about 80%. For the HBM operating margin to rise to 80%, key customer Nvidia would have to further raise product prices to maintain its own gross profit margin (GPM), which, the firm judged, could undermine big tech's capacity for server investment already burdened by rising memory prices.
LS Securities viewed an HBM operating margin of around 60% as a "Goldilocks" level—neither overheated nor sluggish—that can satisfy customers, memory suppliers, and the continuity of AI investment. Reflecting this, it lowered SK hynix's 2027 HBM profit outlook and adjusted the target price to 2.4 million won.
Jeong emphasized that the target price cut does not anticipate a slowdown in HBM demand or the end of the memory upcycle. The firm tempered the likelihood that SK hynix's excess profitability in HBM, as previously expected, will materialize, and reflected the possibility that the premium from supplier concentration could partly decline with Samsung Electronics' entry into HBM4.