Samsung Electronics’ stock rose 7.21%, closing at 53,500 won on Nov. 15, after dropping to the 40,000 won range for the first time in over four years. Despite this rebound, the company’s price-to-book ratio (PBR) remains at 0.97, raising concerns about its valuation. A PBR below 1 indicates that the market value is lower than the company’s book value, reflecting a negative outlook on Samsung’s future growth. The stock’s weakness is primarily due to disappointing profits and competitiveness in its semiconductor business. Legacy chips like DRAM are facing increasing competition from Chinese companies, while artificial intelligence (AI) chips, such as high bandwidth memory (HBM), are losing ground to rivals. So, when can Samsung’s semiconductor business expect a turnaround?
Analysts agree that a quick recovery is unlikely, given the current competitive landscape. Samsung has traditionally led the market by reinvesting DRAM profits into advanced processes. However, China’s Changxin Memory Technologies (CXMT) has nearly quintupled its DRAM production over the past four years, significantly impacting Samsung’s market share. To regain momentum, experts are focusing on the rising demand for on-device AI applications. AI-enabled smartphones and PCs are expected to drive a surge in DRAM demand starting next year.
Considering the current market conditions, experts predict that Samsung Electronics will regain its competitiveness and see improved results by 2026. This year, weaker-than-expected smartphone and PC sales have impacted the company’s performance. However, demand for on-device AI devices and semiconductors is expected to increase starting next year, which could gradually boost earnings. An industry insider said, “Samsung has a strong competitive edge in memory chips for on-device AI, so it will likely benefit first when the smartphone and PC markets recover.” Mirae Asset Securities forecasts that Samsung’s semiconductor division operating profit margin will rise from 15.7% this year to 18% next year, and reach 24.1% by 2026, returning to levels seen during past semiconductor booms. According to financial data provider FnGuide, Samsung’s operating profit is expected to rise by 25.7% next year, reaching 45.4 trillion won, up from the projected 36.1 trillion won this year.
