UBS says rising chip prices will boost Samsung`s earnings

Memory chip prices have climbed sharply in recent months, driven by accelerating demand tied to AI and expanded data center investment, according to market data and analyst commentary.

Pricing for DDR5 DRAM has increased steadily, reflecting strong orders from cloud service providers and hyperscalers. Analysts say the trend has tightened supply conditions across key memory segments.

Samsung Electronics’ co-chief executive Jun Young Hyun told employees in a New Year internal memo that customers have responded positively to the company’s next-generation high-bandwidth memory chips, known as HBM4. He said customer feedback suggested renewed confidence in Samsung’s competitiveness.

Jun also said Samsung is positioned to benefit from favorable memory market conditions this year. He noted that demand for artificial intelligence chips has emerged faster than expected.

Rising memory prices have raised concerns for consumer electronics makers. Goldman Sachs analyst Maho Kamiya recently told clients that higher memory costs could pressure margins at Nintendo, which produces the Switch 2 gaming console.

Kamiya said some investors fear Nintendo may sell the device at a loss. He added that while higher memory prices pose a risk to hardware margins, those concerns may be overstated.

For memory suppliers, the price increases are expected to support earnings growth. UBS analyst Nicolas Gaudois said the surge in pricing should “turbo-charge” profits in Samsung’s memory business.

Gaudois said fourth-quarter 2025 contract pricing for DDR and NAND came in above expectations. UBS raised its forecast for DDR contract prices to rise 35 percent quarter on quarter, and NAND prices to rise 20 percent.

The bank expects customers to push for higher first-quarter 2026 contract pricing. UBS forecasts blended DDR pricing to increase 29 percent and NAND pricing to rise 20 percent in that period.

UBS also expects DRAM supply to remain tight into early 2027. It forecasts HBM shipments to rise sharply in 2026 as production ramps.

The firm raised its operating profit forecasts for Samsung well above consensus estimates. It also increased its price target for Samsung shares, citing stronger and longer-lasting memory pricing momentum.