GlobalData.TS Lombard released a report on 22nd stating that Samsung Electronics and SK Hynix stocks may face limited further gains despite strong Korean stock market performance this year. The analysis firm cited heavy dependence on memory price increases for earnings improvement as the primary constraint, warning that slowing price momentum and expanded Chinese supply could restrict upside. Korean stocks have rallied this year driven by the two chipmakers, but TS Lombard identified high US interest rates and leveraged product liquidations by Korean retail investors as additional headwinds for sustained stock appreciation.
TS Lombard Attributes 55-70% of 2026 Memory Revenue Growth to Price Increases
TS Lombard's report stated that memory semiconductor manufacturers exhibit low earnings sustainability because corporate profits are heavily influenced by memory price fluctuations. The analysis specified that 55-70% of 2026 revenue growth for Samsung Memory, SK Hynix, and Micron stems from memory price increases, while TSMC and Japanese semiconductor equipment makers derive only 15-25% of growth from pricing effects, with process technology and manufacturing competitiveness driving their expansion.
The report explained that memory semiconductor companies benefit from sharp price surges during supply shortage phases, but excess profits rapidly diminish when supply increases due to the industry's structural characteristics. TS Lombard stated that excess profits arising from scarcity gradually disappear once that scarcity becomes recognized by the market, whereas sustained earnings come from companies that grow through multiple AI investment expansion phases, maintain pricing power, and continuously expand total addressable market (TAM).
Samsung Electronics Down 30%, SK Hynix Down 40% From Recent Highs
TS Lombard assessed that Samsung Electronics and SK Hynix valuations are generally at appropriate levels reflecting recent stock price corrections. Samsung Electronics has declined approximately 30% from recent highs, while SK Hynix has fallen approximately 40%.
TS Lombard Recommends Taiwan and Japan Markets Over Korea
TS Lombard recommended Taiwan and Japan markets over Korea as regions positioned to more sustainably benefit from AI infrastructure expansion. The firm cited demand for AI infrastructure and technology as expected to remain robust, but identified the high US interest rate environment and liquidations of leverage products by Korean retail investors as factors constraining further stock price appreciation.
FAQ
What percentage of 2026 revenue growth for Samsung and SK Hynix comes from memory price increases according to TS Lombard?
TS Lombard's report stated that 55-70% of 2026 revenue growth for Samsung Memory, SK Hynix, and Micron is attributed to memory price increases, compared to 15-25% for TSMC and Japanese semiconductor equipment makers.
How much have Samsung Electronics and SK Hynix stocks declined from their recent highs?
Samsung Electronics has declined approximately 30% from recent highs, while SK Hynix has fallen approximately 40%, according to TS Lombard's analysis.
