J.P. Morgan: Samsung Electronics: HBM4 ramp-up boosts profit; shareholder return plan delayed until January next year

What drove the change in third-quarter results?

Samsung Electronics reported third-quarter 2026 revenue of 195.3 trillion won, up 13.9% quarter over quarter and broadly in line with JPMorgan’s forecast; operating profit was 107.4 trillion won, up 20.1% quarter over quarter and 5.5% above the bank’s forecast.
Semiconductor operating profit reached 107.4 trillion won, up 20.4% quarter over quarter and 4.6% above the bank’s forecast. Third-quarter DRAM average selling prices rose 20% quarter over quarter, while NAND average selling prices rose by a high-teens percentage.
Net profit was 75.2 trillion won, 6.8% below the bank’s forecast; a loss of 8.9 trillion won on non-operating items during the quarter limited the flow-through of operating profit growth to net profit.

Samsung said third-quarter HBM4 sales more than tripled quarter over quarter and accounted for about sixty percent of HBM sales; the company said its HBM market share had reached the level of its overall DRAM share ahead of schedule. Its 2027 HBM supply is sold out, and it has agreed target prices with customers that reflect product competitiveness.
JPMorgan expects HBM shipments to rise more than 80% year over year in 2027, with market share slightly above 40%; if price negotiations achieve the expected outcome, the blended HBM selling price will more than double year over year to above 4 dollars per Gb, with the operating margin reaching about 70% during the year.
The bank raised its 2027 earnings per share forecast by 7% to 77,387 won, but it remains about 1% below market consensus. JPMorgan believes Samsung needs more evidence of technological leadership to restore investor confidence in its technological moat.

Samsung guided for fourth-quarter DRAM bit shipments to rise by a mid-to-high-teens percentage quarter over quarter and NAND to rise by a mid-teens percentage. JPMorgan said that, together with peer guidance, this indicates near-term industry supply growth is faster than it expected; but demand fulfillment rates for HBM, DRAM and NAND are only about 50%, 60%–65% and 80%, respectively, so the bank views the production increases as suppliers easing bottlenecks.
The company guided for 2026 capital spending of 84 trillion won, including 76 trillion won for semiconductors. Samsung said a substantial portion of the increase would go to infrastructure such as fabrication facilities and, together with the long lead time from construction to wafer starts, the boost to 2028 output would also be limited.
Samsung expects the larger die sizes and greater number of process layers in HBM4E and HBM5 to constrain bit supply; on that basis, it expects tight memory supply to persist through 2028, while acknowledging that macroeconomic events could change market conditions.

Rising chip costs pushed the Device eXperience division to losses for two consecutive quarters. Samsung expects mobile revenue and profit both to decline quarter over quarter in the fourth quarter, and says the 2027 environment of high memory prices and a shrinking mid- and low-end market remains challenging.
The company is easing the pressure by raising phone prices, increasing the share of premium models and controlling sales of low-end products. On that basis, JPMorgan raised its mobile operating margin forecasts for 2027 and 2028 from negative 9% and negative 11% to negative 4% and negative 5%, respectively, but still expects losses in both years.

Samsung maintained its 2026 shareholder return framework of 90 trillion to 110 trillion won: apart from the previously announced special dividend of 30 trillion won, arrangements for the remaining 55 trillion to 75 trillion won will be decided on the fourth-quarter earnings call in January 2027, with buybacks formally included as an option.
JPMorgan expects the company to announce dividends and buybacks each exceeding 40 trillion won at that time. Assuming 50% of free cash flow is returned and allocated between dividends and buybacks in a 65:35 ratio, the bank estimates total shareholder yields of about 13% and 18% in the next two years, respectively.
JPMorgan maintained its overweight rating and June 2027 price target of 400 thousand won, using a multiple of 6 times earnings per share for the next 12 months, at the upper end of the 4–6 price-to-earnings range seen at past memory-stock cycle peaks; the bank values the continuation of the earnings cycle and the potential catalyst of earlier or larger shareholder returns.