Nomura Securities Forecasts 2x Surge in South Korean Semiconductor Target Prices

Global investment bank Nomura Securities has significantly raised its target prices for Samsung Electronics and SK Hynix, declaring that 'the core of the AI era is a memory war.' Nomura Securities has set target prices of 590,000 won for Samsung Electronics and 4 million won for SK Hynix, pointing out that their current forward P/E ratio of 6 times is a 'serious undervaluation' that fails to reflect the era's transformation.

Nomura Securities projects memory demand to increase thousands of times over the next five years. As AI becomes more sophisticated, infrastructure requires more memory, and individual users seeking better AI service outcomes will input longer contexts and connect more information. The demand for memory in the AI era is immeasurably larger than when smartphone cameras first emerged. The analysis suggests that competitiveness will lie not in simple processing power (CPU/GPU) but in 'how much and how accurately it can remember (memory).' This is the essence of the AI inference era that Nomura Securities is focusing on.

The AI era is bringing about structural changes in the memory industry, unlike in the past. As AI is used more, it needs to remember more data, connect more contexts, and store information for longer periods, creating a feedback loop where increased usage leads to greater memory dependency. Nomura Securities diagnoses that as the AI industry shifts its focus from 'learning' to 'inference,' the memory industry is breaking away from its past cyclical structure and entering a 'long-term structural growth phase.'

Within this structure, long-term supply agreements (LTAs) of three to five years or more, advance payment structures, and support for customer capital expenditures (CAPEX) provide earnings stability for memory manufacturers, creating a seller's market. The report anticipates that over the next five years, as memory demand increases, supply will only grow five to sixfold, leading to a sustained structural shortage.

Nomura Securities' report goes beyond stock price predictions, closer to presenting an industrial paradigm shift where 'memory bottlenecks will occur in the AI era, and South Korean semiconductors are poised to solve them.' Historically swayed by global economic conditions, Korean semiconductors are now becoming the 'memory repositories' for AI civilization to function. Semiconductors are positioning themselves as assets of the AI era and the 'memory' of humanity. The current PER of 6x for Samsung Electronics and SK Hynix is deemed undervalued, and the report emphasizes the need to reset valuation metrics to levels comparable to TSMC (PER 20x).

Samsung Electronics is estimated to see its 2026 operating profit increase by 604% year-on-year to 307 trillion won, with high operating margins in both DRAM and NAND. SK Hynix is predicted to achieve a return on equity (ROE) of 100% in 2026, in addition to an operating profit of 281 trillion won, thanks to its high financial leverage.