Samsung Electronics stocks fell 6.92% on July 7 despite announcing record second-quarter operating profit of 89.4 trillion won. The stock closed at 296,000 won, down 22,000 won from the previous session, as concerns emerged over slowing price increases in memory chips. The sharp decline triggered trading halts on the KOSPI market, with both sell-side circuit breakers and market-wide circuit breakers activated during the session. Analysts attributed the drop to profit-taking by foreign investors following recent price surges and ongoing rebalancing trades, alongside market concerns about memory pricing momentum. Korean stocks experienced extreme volatility as semiconductor shares led the broader market downturn, though analysts emphasized that Samsung Electronics' profit trajectory remains on an upward path through the second half of the year.
Samsung Electronics Announces 89.4 Trillion Won Q2 Operating Profit
Samsung Electronics disclosed preliminary second-quarter operating profit of 89.4 trillion won on July 7, marking the company's highest quarterly profit on record according to Korea Exchange data. The announcement came as the KOSPI index fell sharply, with Samsung Electronics shares declining from 318,000 won to 296,000 won during the trading session. Foreign investors engaged in profit-taking following recent stock price gains, while rebalancing trades contributed to sustained selling pressure. The stock's decline occurred despite the company posting earnings that exceeded previous quarterly records, reflecting market concerns about the sustainability of memory chip price increases.
Analysts Project Continued Memory Supply Shortage Through 2028
KB Securities forecast that current memory supply shortages will persist for at least two years, citing ongoing demand from AI server applications and limited capacity expansion by suppliers. Lee Jong-wook, researcher at Samsung Securities, stated: "AI demand and cloud companies' AI revenue continued to grow without decline. Customers still demand higher-performance HBM and DRAM. However, supply companies have not yet entered the full-scale expansion phase. The memory cycle is still in the first half." Market research firm TrendForce reported third-quarter DDR5 contract prices increased 10% from previous levels, with fourth-quarter prices rising 14%. Daishin Securities projected HBM average selling prices (ASP) will increase 91% year-over-year in 2027, while analysts expect Samsung Electronics' memory ASP to rise in the second half, improving profit margins.
Securities Firms Raise Samsung Electronics Profit Forecasts for 2027
KB Securities estimated Samsung Electronics' annual operating profit at 375 trillion won for 2026, representing a 761% increase from the previous year, with 2027 operating profit projected at 547 trillion won. Mirae Asset Securities forecast 2026 operating profit at 397 trillion won and 2027 profit at 576 trillion won, raising its 2027 estimate by 6.0% following the July 7 preliminary earnings announcement. Han Ji-young, researcher at Kiwoom Securities, stated that the KOSPI index's intraday level of 7,300 points on July 7 reflected a forward price-to-earnings ratio of 6.3 times, comparable to the low point during the financial crisis at 6.27 times. Park Jun-young, researcher at Hanwha Investment & Securities, stated: "There has been no case where a memory cycle ended due to noise or misunderstanding rather than a shock affecting fundamentals. Extreme volatility occurring without clear reasons in Korea's memory industry, which has perfect fundamentals, is judged as a low-price buying opportunity, and the end of the stock price cycle has not arrived."
FAQ
What caused Samsung Electronics stocks to fall on July 7 despite record profit?
Samsung Electronics stocks declined 6.92% on July 7 despite announcing record second-quarter operating profit of 89.4 trillion won due to market concerns over slowing memory chip price increases, profit-taking by foreign investors, and ongoing rebalancing trades.
What are analysts' profit forecasts for Samsung Electronics in 2027?
KB Securities projected Samsung Electronics' 2027 operating profit at 547 trillion won, while Mirae Asset Securities forecast 576 trillion won. Mirae Asset raised its 2027 estimate by 6.0% following the company's second-quarter preliminary earnings announcement on July 7.
How long do analysts expect memory supply shortages to continue?
KB Securities forecast that current memory supply shortages will persist for at least two years, with Lee Jong-wook of Samsung Securities stating that supply companies have not yet entered full-scale capacity expansion phases while customer demand for higher-performance HBM and DRAM continues to grow.
