Samsung Electronics and SK Hynix are in deal with Monday after closing sharply larger on Friday, as a long-term margin forecast from US flash-memory maker SanDisk gave traders purpose to reassess how lengthy the AI-driven reminiscence growth might final.
South Korean markets are closed Monday for the Liberation Day vacation.
On Friday, Samsung rose 2.43% to 274,500 gained and SK Hynix climbed 3.26% to 1.645 million gained, serving to the KOSPI end 2.41% larger at 6,977.34.
The catalyst was SanDisk’s investor day, the place the corporate laid out a framework that challenged assumptions about reminiscence cyclicality.
SanDisk expects mid- to high-teens income progress from fiscal 2028 by way of 2030, alongside non-GAAP gross margins of about 80% and working margins close to 75%.
SanDisk’s 80% goal adjustments the reminiscence debate
For Samsung and SK Hynix, the importance lies in what these targets suggest for the business.
Reminiscence has traditionally adopted a well-known sample. Robust pricing boosts income, encourages funding and finally brings sufficient new provide to crush margins.
SanDisk is arguing that AI demand, tight capability and longer-term buyer agreements might maintain business profitability far above historic norms for years.
JPMorgan analyst Harlan Sur mentioned SanDisk was “uniquely positioned to seize the continued structural inflection in NAND demand” pushed by AI inference.
He additionally argued that longer buyer agreements had improved the corporate’s margin profile whereas lowering the boom-and-bust volatility related to reminiscence.
Morgan Stanley analyst Joseph Moore provided one other bullish learn.
MarketWatch reported that Moore believes SanDisk might “keep at or above these margin ranges for a number of years” whereas shortages persist, though he questioned whether or not working margins round 75% might be sustained indefinitely.
Wall Road sees a scarcity that would run for years
That message matches a shift in analyst expectations across the reminiscence cycle.
Macquarie Capital analysts mentioned the business is going through the “worst reminiscence crunch in historical past” and see no signal of provide constraints easing throughout the subsequent three years.
The agency described AI inference-related reminiscence demand as “off the charts” and expects Samsung and SK Hynix to steer the Korean market’s near-term restoration.
Inference issues as a result of working AI fashions at scale requires huge quantities of reminiscence and storage, not simply computing energy.
As AI utilization expands, information centres want extra HBM and DRAM, whereas NAND demand can rise as operators search cheaper methods to retailer and retrieve the huge portions of information generated by AI workloads.
Bernstein analyst Mark Newman informed MarketWatch that SanDisk’s deliberate high-bandwidth flash might develop into a “big new progress driver for NAND demand.”
He added that the know-how might devour considerably extra wafer capability, doubtlessly conserving provide circumstances tighter for longer.
Excessive margins nonetheless carry an outdated cyclical threat
The bullish case doesn’t imply the reminiscence cycle has disappeared.
Moore’s warning is vital. SanDisk’s present profitability displays an distinctive scarcity, and an 80% gross-margin framework leaves little room for disappointment if provide expands sooner than anticipated.
The identical threat applies to Samsung and SK Hynix.
Each stand to learn if AI infrastructure spending continues to soak up new capability, however excessive costs additionally give producers a robust incentive to put money into extra manufacturing capability.
