[Samsung Electronics]
[Samsung Electronics]

Global credit rating agency S&P Global Ratings has revised its outlook on Samsung Electronics from "stable" to "positive," citing an AI-driven memory supercycle and strengthening competitiveness in high-bandwidth memory that are expected to sustain earnings improvement for at least the next two years.

In a report released Tuesday, S&P said the positive outlook "reflects our view that Samsung Electronics will continue to deliver solid operating performance over the next two years, expanding its market share in HBM and foundry through enhanced technological competitiveness amid structural growth in the memory industry."

S&P particularly noted that Samsung Electronics, as the world's largest memory chip maker, stands to be the biggest beneficiary of the AI-driven memory supercycle. The agency said surging investment in AI data centers is driving up memory demand while supply remains constrained, sustaining upward price pressure. Prices for some DDR5 products have risen three to four times compared with last year, S&P assessed.

The agency sharply raised its earnings forecasts for Samsung Electronics. It projected annual sales of approximately 683 trillion won ($463 billion) in 2026 and around 821 trillion won in 2027 — both record highs. EBITDA is forecast to more than quadruple, rising from about 91 trillion won in 2025 to 393 trillion won in 2026 and 502 trillion won in 2027.

The report said the memory supply shortage is unlikely to ease in the near term. Capital expenditure by the world's four largest hyperscalers is expected to reach $1 trillion by 2028, with a significant portion directed toward AI data center construction. Meaningful new production capacity is not expected to come online until after 2028, pointing to a sustained supply-demand imbalance through 2026 and 2027.

The expansion of long-term supply agreements was also cited as a factor supporting industry stability. With supply remaining tight, customers are increasingly favoring three- to five-year contracts, and a growing share of customized memory products is improving order visibility — helping protect profitability even during potential downturns, S&P said.

S&P also offered a positive assessment of Samsung Electronics' competitiveness in HBM and foundry. The agency said the company has strengthened its technological edge in its latest HBM4 products by adopting 1c DRAM and a 4-nanometer base die, and that yield issues flagged in the previous-generation HBM3E have been substantially resolved.

The foundry business is also expected to recover. S&P said that as leading-edge process yields stabilize, Samsung Electronics could emerge as an alternative supplier for major customers if industry leader TSMC continues to face capacity constraints.

S&P assessed Samsung Electronics' financial health positively as well. Annual capital expenditure is projected to rise from 52 trillion won in 2025 to between 81 trillion won and 84 trillion won over the following two years as production capacity expands. The company's strong cash generation is expected to drive free cash flow from 33 trillion won last year to 201 trillion won this year and 288 trillion won next year.

Market observers say expectations for Samsung Electronics' earnings recovery are rising as AI semiconductor investment increasingly appears capable of sustaining the memory upcycle over the long term. If the company can demonstrate technological competitiveness in HBM and foundry, it could extend its influence beyond memory to become a broader player across the AI semiconductor ecosystem.


rainbow@heraldcorp.com