The U.S. memory semiconductor company Micron has reported a record earnings surprise, positively impacting the South Korean stock market. Micron's performance significantly exceeded market expectations, raising optimism for domestic memory firms Samsung Electronics and SK Hynix.
On October 1, the Korea Exchange reported that shares of both Samsung Electronics and SK Hynix rose together for the first time in a while. Samsung's stock closed at 276,000 won, up 7,500 won (2.79%) from the previous trading day. SK Hynix's shares finished at 1,833,000 won, an increase of 57,000 won (3.21%).
The rise in semiconductor stocks was driven by Micron's strong earnings report, often seen as a bellwether for the memory semiconductor industry. Micron's revenue for the fourth quarter of fiscal year 2026 reached $54.23 billion, nearly quadrupling year-over-year and surpassing market expectations. The adjusted earnings per share (EPS) also exceeded forecasts at $33.42.
A memory shortage, where supply cannot meet demand, is expected to persist. A significant portion of next year's production has already been committed to customers, and the scale of long-term supply contracts has increased substantially. Micron's long-term supply contracts now total $32 billion.
Sanjay Mehrotra, Micron's CEO, stated, "Micron achieved record results in fiscal year 2026 and expects even stronger performance in fiscal year 2027." He added that contracts for a significant portion of production in fiscal year 2027 have been secured with customers.
Micron's earnings surprise has also heightened expectations for the third-quarter results of Samsung Electronics and SK Hynix, which are due this month. Analysts predict Samsung's operating profit for the third quarter could reach 110 trillion won, marking the first time a domestic company surpasses 100 trillion won in quarterly operating profit. SK Hynix is expected to report an operating profit of around 77 trillion won. The recent rise in memory prices for DRAM and NAND flash is anticipated to significantly boost profits, according to analysts.
In line with this, target prices for Samsung and SK Hynix are being adjusted upward. Yuanta Securities raised its target price for Samsung from 530,000 won to 630,000 won, while Mirae Asset Securities increased its target from 370,000 won to 400,000 won. NH Investment & Securities and Eugene Investment & Securities maintained target prices of 530,000 won and 560,000 won, respectively. For SK Hynix, DB Securities set a target price of 2.3 million won, while Mirae Asset Securities set it at 3.1 million won.
Baek Gil-hyun, a researcher at Yuanta Securities, noted, "The memory semiconductor shortage is expected to continue into 2027-2028. While some are concerned about a potential peak-out in 2028, considering the erosion of DRAM production capacity and the growing demand for high-capacity memory due to AI inference, the timeline for resolving the supply shortage may be longer than anticipated."
Kim Young-geon, a researcher at Mirae Asset Securities, stated, "Despite downward revisions in operating profit estimates, SK Hynix's valuation remains relatively low. Big tech companies are increasing the amount of HBM in their AI server builds, which is likely to benefit SK Hynix, the leading player in the HBM market."
* This article has been translated by AI.
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