Goldman Sachs South Korea Technology: Investor Feedback — Bullish on Memory Fundamentals While Highlighting Downside Risks
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Goldman Sachs gathered investor feedback on the South Korean technology sector through approximately 60 recent meetings. While investors remain broadly bullish on memory industry fundamentals, concerns over downside risks are increasing. Key risks highlighted include a potential slowdown in AI capital expenditure, demand destruction in smartphones and PCs, aggressive capacity additions by memory suppliers, falling spot prices, and a negative inflection in the second derivative of memory price growth starting in the second quarter of 2026. Despite these risks, most investors maintain a positive near-term outlook and are willing to hold or add positions unless AI capex corrects sharply. Memory price increases are expected to persist throughout the year, potentially extending into 2027 due to tight supply. Regarding specific stocks, there is no definitive preference between Samsung Electronics and SK Hynix. However, a growing proportion of investors are marginally more positive on Samsung due to its greater exposure to conventional memory and promising HBM4 progress. Hynix remains viewed as the HBM market share leader. Among non-memory names, Samsung Electro-Mechanics has attracted considerable attention driven by MLCC price hike cycles and ABF substrate upside potential. Goldman Sachs reiterates Buy ratings on Samsung Electronics, SK Hynix, and SEMCO.