Samsung Electronics' HBM3e certification target

[Hantu Securities Chae Minsuk/Hwang Juntae] Industry Brief: If you're obsessed with details, you miss the big picture

● Details
- Samsung Electronics' HBM3e certification target for Nvidia is August
- SK Hynix started mass production of HBM3, the previous product, in October 2022, and Samsung Electronics started in September 23, with a schedule gap of 11 months
- Samsung Electronics' HBM3 is not authenticating Nvidia due to schedule delay, but only with 3e
- If HBM3e is certified in August as planned, the difference in the timing of mass production between the two companies will be 5 months, shorter than HBM3's 11 months
- In 2024, HBM's sales in DRAM are expected to be 27% for SK Hynix and 15% for Samsung Electronics. SK Hynix, which has a high proportion of HBM sales, will have a higher operating margin on memory

● a big picture
- Samsung Electronics, SK Hynix both saw their earnings rise upward, as the memory upcycle is currently underway
- It is impossible to meet Nvidia HBM demand only with SK Hynix and Micron. Nvidia has a strong incentive to complete Samsung Electronics' HBM certification
- Price hikes are a major factor in the memory market this year. The biggest beneficiaries of rising memory prices are Samsung Electronics and SK Hynix
- As of the end of this year, the utilization rate of both DRAM and NAND did not recover to the level before production cuts. This is because the increase in P can be maintained only when supply restrictions are continued
- If Q and P increase at the same time, Samsung Electronics, which has a larger capa, is advantageous. However, if only P is on the rise, it is meaningless to judge the pros and cons of the two companies
- In the past, the expansion of Capa through the increase of CAPEX was accompanied by the benefit of the entire value chain as well as Samsung Electronics and SK Hynix.
- However, this cycle will see a time gap between value chain benefits as capa growth is limited
- Samsung Electronics' Shares Are Valuable Attractive. The stock price will rise immediately after NVIDIA's HBM certification is completed. This is the time to buy
- SK Hynix's stock price will reflect the news of Samsung Electronics' certification of Nvidia-flavored HBM as a negative factor in the short term. However, it is noted that the completion of Samsung's certification does not mean that SK Hynix's HBM performance will decline. The operating profit of memory is estimated to be ahead of Samsung Electronics
- Although SK Hynix is at the top of its valuation compared to the past, we believe there is enough room for a rise considering the extent of profit expansion. Maintain Top pick opinions in the sector

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