Samsung Electronics (005930)

Equity Research 7 September 2026 | 5:25AM SGT

Samsung Electronics (005930.KS): 7 key takeaways from NDR: Focusing on technology leadership amid the solid fundamentals; Buy (on CL)

We hosted investor meetings with Samsung Electronics (SEC) in Canada and the US. 7 Giuni Lee | key takeaways from the meetings were: 1) Reiterated its view of 2027 memory Goldman Sachs (Singapore) Pte

supply being tighter than 2026, with tightness to persist in 2028, 2) Shell-first Taeyong Lee | strategy to offer better flexibility, while remaining vigilant on potential Goldman Sachs (Asia) L.L.C., Seoul Branch over-investment, 3) LTA discussions progressing well; better visibility and more efficient investment decisions compared to past cycles, 4) Technology leadership the Daiki Takayama | priority, 5) Foundry business on track, with strong demand for advanced node, 6) Goldman Sachs Japan Co., Ltd. Rising needs for customization boding well with its memory and foundry capabilities, and 7) All options including both buybacks and dividends considered for shareholder return. We reiterate our Buy rating (on CL) on the name.

7 Key NDR takeaways n Reiterated its view of 2027 memory supply being tighter than 2026, with tightness to persist in 2028. With the memory demand fulfillment rate being at only around a 60% level, but demand continuing to grow while production growth is limited in the near-term, SEC reiterated its view that it expects the supply and demand imbalance for memory to widen in 2027 compared to this year, and for tightness to persist even into 2028 even if all the announced industry capacity comes online. n Shell-first strategy to offer better flexibility, while remaining vigilant on potential over-investment: SEC has continued to maintain a high level of capex even during the downcycle, which has led to a higher clean room capacity for the company relative to its peers during the current cycle. The company plans to maintain this shell-first strategy which would enable enhanced flexibility in meeting customers’ demand, while its cautiously optimistic view on the cycle should help prevent any potential over-investment. In other words, while the company continues to build the fab shells to prepare for future demand, the company’s investment on equipment for actual production will be based on confirmed demand, not ahead of demand. n LTA discussions progressing well; better visibility and more efficient investment decisions compared to past cycles: At its 2Q26 earnings call, SEC disclosed that it has completed long-term agreements (LTA) with the top five global data center customers, and is in the final stage of negotiations with five additional large customers related to AI demand. During the NDR, the company

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Goldman Sachs Samsung Electronics (005930.KS)

highlighted that these five additional negotiations are progressing well, and customers continue to come back wanting to add even additional years beyond the typical 5-year LTAs. SEC also stressed that its target of LTAs eventually accounting for 60-70% of its planned production capacity would provide them with more control and flexibility with securing better visibility on its long-term revenue and earnings. This improved demand visibility would also lead to more efficient investment decisions for the company, helping to reduce the cyclicality in the memory industry that we have seen in the past. n Technology leadership the priority: Throughout the meetings, SEC emphasized how it is prioritizing technology leadership. The company has continued to spend a significant amount on R&D, where it saw a 26%/78% yoy growth in R&D expense in 1Q26/2Q26, and the R&D expense as %…