Key Call: Samsung Electronics — AI demand keeps strengthening

In spite of recent calls for an AI slowdown, Samsung has seen no evidence of customers' memory demand being paired down. On the contrary, it continues to see upside for server DDR5 and server SSD, with the latter improving at fast pace. Whilst acknowledging HBM de-specing (Nvidia Rubin Ultra to use HBM4-Hi), this has actually translated to slight upside to HBM bit procurement into '27. Samsung is hence not changing its forecast capacity allocation to HBM and targets high 30s % share in HBM (UBSe: 42% in '27E). Its logic foundry backlog is growing much larger, with 8nm and below process nodes fully utilised. We now forecast DRAM blended ASPs up 27% QoQ in 3Q26E (was +23%) on the back of better negotiations for DDR. Net, we keep our 3Q26E OP forecast at Won117tn, 6% ahead of VA consensus. We slightly increase '27E onward OP (+1-2%) and are 19% ahead of consensus for '27E. We forecast semis capex of Won71tn in '26E, Won86tn in '27E and Won100tn in '28E. Valuation: Won535k;