Meritz Securities: Samsung/SK Hynix Severely Undervalued, Market Misjudging Supply-Demand
N.R. Finch
Meritz Securities analyst Kim Sunwoo argues the market has fundamentally misjudged Samsung Electronics and SK Hynix — SK Hynix trades at roughly 3.5× 2027E P/E, Samsung at about 3.9×, both near historic lows. His view: panic itself is creating the buying opportunity.
What exactly is the market afraid of?
The semiconductor sector has been under sustained pressure, driven by a core fear: memory oversupply by 2027.
Kim argues investors are mistaking fragments for the full picture. "A butterfly effect born of misunderstanding is distorting semiconductor stock prices."
This means → current share prices reflect not a deterioration in fundamentals, but a sentiment stampede driven by misreading.
Is the supply-demand gap really as loose as the market thinks?
By Kim's estimates, DRAM demand fulfilment in H2 2026 sits at just 75%–80% — the supply shortfall is already widening.
He forecasts fulfilment will slide further to the 60% range in 2027; even stripping out inventory pre-builds and counting only real end-demand, the figure is roughly 70%.
In plain terms = the market is calling "oversupply," but this analysis says the reality is growing shortage.
The call is not isolated: Intel's CEO has said memory supply and pricing won't ease before at least 2028. Micron's 16 recent long-term agreements include take-or-pay clauses — meaning buyers must pay whether or not they take delivery — signalling that major customers are scrambling to lock in volume.
Is SK Hynix slashing prices to win long-term contracts?
A recent market narrative holds that SK Hynix signed long-term supply deals with big tech at steep discounts. Kim pushes back explicitly.
He frames the move not as a price concession but as early positioning to capture the generative-AI and AI data-centre market.
The report states: SK Hynix is adding new demand partners through JVs and partnerships, and "exclusive capture of stable market share in this space is a real possibility."
This means → Kim's conclusion is that SK Hynix is making an investment, not a sacrifice.
How cheap are these stocks?
SK Hynix trades at roughly 3.5× 2027E P/E; Samsung Electronics at about 3.9× — both at historic lows.
Kim writes: "The degree of panic is proportional to the expected return — a lesson that deserves attention right now."
In plain terms = by his logic, the deeper the panic and the cheaper the valuation, the larger the potential upside.
What catalysts could materialise?
Samsung Electronics: its three-year shareholder-return programme enters its final phase this year. Buyback-and-cancel, cash dividends, and employee-incentive share repurchases together form a price catalyst.
SK Hynix: Kim expects the company to actively explore special dividends and other extra-return measures.
SK Hynix and SK Group have announced they will formally advance their AI data-centre business from H2 onward. Partnerships with major US tech firms and frontier-model companies are expected to surface soon, spanning JV formation, equity investment, and usage commitments.
What will prove or disprove this contrarian call?
Whether the supply shortfall continues to deepen as Kim forecasts is the first verification point.
Whether shareholder returns and AI data-centre partnerships land on schedule is the second.
This reflects the report's core bet: the market is pricing panic, not fundamentals — and if fundamentals deliver, the current valuation represents a significant mispricing window.
Content is for reference only, not financial advice.