Amidst pressure on the share prices of Samsung Electronics and SK hynix, a South Korean securities analyst has issued a contrarian signal, arguing the market has fundamentally misjudged the sector's prospects, presenting a current buying opportunity.

According to a recent report from Meritz Securities analyst Kim Sunwoo, a "butterfly effect triggered by market misunderstanding is disturbing semiconductor stock prices." He emphasized that investors are mistaking fragmented information for the complete picture, leading to a myopic and pessimistic interpretation. He believes the current excessive market anxiety will dissipate with imminent shareholder returns and progress in partnerships with major tech firms.

Valuation Perspective Shows Extreme Undervaluation

From a valuation standpoint, Kim Sunwoo notes that both Samsung Electronics and SK hynix are currently in a state of extreme undervaluation. His report indicates SK hynix's forward price-to-earnings ratio for 2027 is approximately 3.5x, while Samsung Electronics' is around 3.9x, both at historically low levels. He states, "The degree of panic is proportional to the expected return, a lesson that needs particular attention now."

Supply Shortfall: Market Underestimates the Gap

Kim Sunwoo questions the market's prevalent concern about an "oversupply in 2027." According to his calculations, the DRAM market's demand fulfillment rate in the second half of 2026 will be only 75% to 80%, indicating a worsening supply gap.

He further forecasts this fulfillment rate will drop into the 60% range in 2027, and even when calculating only genuine end-demand (excluding inventory stocking), the rate would only be around 70%. "A further deepening of the supply shortage is a fairly certain scenario," the report states.

This view aligns with other industry voices. The CEO of Intel has previously stated that memory supply and pricing are unlikely to ease until at least 2028. Recent long-term supply agreements signed by Micron, which include buyer-favorable "take-or-pay" volume guarantee clauses, also indicate structural support for memory demand.

LTA Debate: An 'Investment' for SK Hynix, Not a 'Sacrifice'

Addressing market rumors that SK hynix secured long-term agreements with large tech companies by offering significant price cuts, Kim Sunwoo explicitly refutes this notion.

He argues this move is not a simple price concession but a strategic positioning to capture the "vast new customer base territory" of the generative AI and AI data center market. SK hynix is securing long-term, stable demand by locking in core customers.

Kim Sunwoo writes in the report: "SK hynix is focusing on building mid-to-long-term demand... particularly through joint ventures or partnerships related to AIDC, new demand sources are forming, and the possibility of securing a stable, exclusive market share in this field exists."

His conclusion is that SK hynix is making an investment, not a sacrifice.

Catalyst from Shareholder Returns: Samsung Buybacks, SK Hynix Special Dividends Loom

Kim Sunwoo believes the current excessive market pessimism will be alleviated by a series of upcoming positive events.

For Samsung Electronics, its three-year shareholder return program is concluding this year, significantly improving return visibility. The report anticipates that share buybacks for cancellation, cash dividends, and stock repurchases for employee incentives will collectively act as catalysts for a share price rebound. For SK hynix, Kim Sunwoo expects the company to actively consider additional return measures like special dividends.

Simultaneously, progress in the AI data center business is noteworthy. Kim Sunwoo notes that SK hynix and the SK Group have announced the formal advancement of AIDC business from the second half of this year. Partnerships with major U.S. tech companies and frontier AI model firms are expected to be unveiled soon, potentially involving joint ventures, equity investments, and usage commitments.

On valuation, market forecast data cited in the report shows that based on 2027 earnings, SK hynix trades at a P/E of about 3.5x and Samsung Electronics at about 3.9x, both in an extreme undervaluation range. Kim Sunwoo writes in the report: "The companies are in a phase of excessive adjustment. The degree of panic is proportional to the expected rate of return, a lesson that should be fully heeded now."