Samsung Regains HBM, Foundry Competitiveness as Shareholder Returns Reaffirmed, Daol Says

Daol Investment & Securities said on July 31 that Samsung Electronics gave investors two key takeaways on its earnings conference call a day earlier: firmer evidence of a strong industry upcycle and a meaningful reaffirmation of its shareholder return policy. The brokerage maintained its Buy rating and 585,000 won target price.

Analyst Ko Young-min said Samsung Electronics reported second-quarter consolidated revenue of 171.5 trillion won and operating profit of 89.5 trillion won, up 1,813.8% and 130.0% from a year earlier, respectively. The results beat market expectations and reflected strong semiconductor market conditions.

From the third quarter, high-bandwidth memory, or HBM, is set to make up a larger share of sales, while pricing under long-term agreements, or LTAs, will begin to be fully reflected in earnings, Ko wrote. That means memory prices may no longer climb as sharply as before, but prices in non-LTA transactions remain strong, which is a positive sign.

Daol said memory demand centered on AI servers has remained steady. Customers have continued buying even as prices rose somewhat.

Samsung said it had completed LTA negotiations with its five largest data-center customers, with talks with additional clients nearing completion, Ko said. As broader contracts are signed, Samsung stands to secure the most favorable pricing terms among the three major memory makers — Samsung, SK Hynix and Micron — in his view.

Ko also said Samsung showed meaningful performance indicators in both HBM and foundry, where investors had been seeking proof of a recovery in core competitiveness. With HBM4, the company now has a clearer path toward raising its HBM market share to a level similar to its position in commodity DRAM.

In foundry, Samsung has secured orders from a major US cloud service provider and is making smooth progress in pursuing additional orders from other large customers, including Broadcom, Ko said. That has laid the groundwork for both Phase 1 and Phase 2 of its Taylor, Texas, fab to operate stably and generate profit in the future.

Samsung also reaffirmed on the call that it will use half of free cash flow for shareholder returns, Ko said. Daol estimated that implied a dividend yield of about 8.8%, underscoring continuity in the company's dividend policy.

Kang Kyung-ju, Hankyung.com reporter qurasoha@hankyung.com