GOLDMAN SACHS: THE MARKET OVERSTRETCHED THE STORAGE INDUSTRY BY REITERATING THE TRISTAR ELECTRONICS AND THE SK HERCULES “BUY-IN” RATING

On August 5, Goldman Sachs published a report in response to the market's misgivings about the Korean storage industry, stating that the concern was overread and that the real supply and demand pattern was still supporting the storage price to remain high, maintaining the target price of Tristar Electronics and SK Hercules of 490,000 won and 3.5 million won, respectively, and reiterating the “buy-in” rating. Goldman Sachs predicts that the combined HBM prices of Samsung electrons and SK Hercules will increase by approximately 87 per cent and 100 per cent, respectively, in 2027, close to $2.9 per Gb, which is about 24 per cent higher than market expectations, mainly due to the continued oversupply of HBM requirements driven by AI servers, combined with a fall in the latest generation of HBMs, and that the supply and demand gap for HBMs in 2027 is expected to be more stressy than this year. The Bank expects HBM to increase its share of the total DRAM collection from about 8 per cent and 14 per cent this year to 16 per cent and 22 per cent, respectively, in 2027 and to 18 per cent and 25 per cent, respectively, in 2028. Goldman Sachs believes that the LTA provisions are becoming more favourable to suppliers, with Samsung disclosures already contracting with the top five data centre clients worldwide and final negotiations under way with five other large clients, with multi-year contracts expected to reach about 60 to 70 per cent of planned capacity. With regard to inventories, by the end of the second quarter of this year, the Bank estimated that the stock of DRAM and NAND of Samsung and Hercules was within two to four weeks, below the normal level of approximately four to five weeks。