Memory Pricing To Stabilize in 2022 Due to Solid Server Demand and Supply Constraints

We revise our fair value estimates for South Korean memory suppliers, Samsung Electronics to KRW 82,000 from KRW 80,000 per share (on the other hand, we trim its fair value estimate per GDR to USD 1,640 from USD 1,700 due to the weaker South Korean won); and SK Hynix to KRW 150,000 from KRW 148,000 per share, to incorporate the weaker South Korean won and our updated view on both DRAM and NAND. While these updates lift our earnings forecasts for 2022 and 2023, we retain our view that memory’s price decline will accelerate from mid-2023, which makes our fair value estimates broadly unchanged. Despite the concern about the weakness of consumer electronics demand due to various uncertainties, which has pushed down memory suppliers’ share prices over the past few months, we maintain our view that memory supply will remain tight throughout this year, due to the solid server demand and supply constraints. Therefore, we believe both shares are currently undervalued. We continue to prefer SK Hynix over Samsung Electronics.