Memory chip supercycle 'not even at midpoint,' analyst says as Samsung earnings forecast tops W90tr

Samsung Electronics' record-breaking earnings run is unlikely to be a one-off surprise, analysts say, as AI-driven memory chip shortages are expected to push prices structurally higher for years to come. Some analysts now argue the memory chip industry has not even reached the midpoint of its current supercycle.

Meritz Securities on Monday estimated Samsung Electronics' second-quarter operating profit at 90.1 trillion won ($58.5 billion) and raised its target price on the stock from 420,000 won to 500,000 won, while maintaining a buy recommendation.

The estimate far exceeds the market consensus of around 85 trillion won and the 75 trillion won to 84 trillion won range that other brokerages had recently projected.

Market expectations for Samsung's earnings had been tempered somewhat after the company set aside a special performance bonus reserve. Meritz Securities, however, forecast operating profit would still surpass 90 trillion won even after accounting for roughly 19.3 trillion won in special performance bonus provisions for the Device Solutions semiconductor division.

"Given that only part of the provision assumption has been reflected in the consensus, Samsung's earnings will once again beat expectations by a stunning margin," the brokerage said in its report.

Meritz Securities estimated operating profit for the Device Solutions division at 109.5 trillion won. It cautioned, however, that the LSI and foundry businesses would likely post operating losses exceeding 2 trillion won as they expand production capacity.

"Before provisions, the memory semiconductor division's operating profit reaches 112 trillion won, but the LSI and foundry division's operating loss will worsen to more than 2 trillion won as it ramps up operations," said analyst Kim Seon-woo.

Non-semiconductor divisions are expected to underperform. Samsung Display is forecast to post operating profit of 580 billion won, while the MX mobile and DA home appliance and VD display businesses within the DX division are projected to record operating losses of around 1 trillion won and 150 billion won, respectively.

Meritz Securities expects Samsung's strong results to continue throughout the year, with the key driver being a memory supply shortage fueled by surging AI investment.

"A severe supply shortage in the memory market is set to deepen through the end of next year due to a lack of clean room capacity," Kim said. "Despite some resistance to price increases in B2C segments such as smartphones, the share of those sales will naturally and rapidly decline."

He added that cloud service providers are aggressively pursuing long-term agreements and partnerships to secure memory supplies through various channels by year-end, as computing resources are being absorbed into the AI sector.

Meritz Securities also argued that rising memory prices reflect a structural shift rather than a temporary phenomenon.

"The severe supply shortage in the memory semiconductor market is set to deepen through the end of next year due to clean room constraints," Kim said. "The memory semiconductor cycle still looks far from reaching its midpoint."

He went on to say that space constraints mean memory supply will fall woefully short of keeping pace with demand growth at least through the fourth quarter of 2027. He added that voices resisting the linear, structural rise in chip prices are "nothing more than the cries of a coachman watching the internal combustion engine — in the age of a race to invest in artificial general intelligence, redistribution of supply is inevitable."

Market observers say the forecast signals not just a strong quarter for one company but a broader structural transformation of the memory industry in the AI era. As competition in generative AI and data center investment intensifies, the race to secure memory chips is expected to be prolonged — shifting the key variable for the semiconductor industry from macroeconomic conditions to supply capacity.