Goldman Sachs Korea Storage Experts Conference Call: DRAM Prices to Continue Rising This Year, HBM Prices to Soar Next Year, Long-term Contract Coverage to Further Expand

Goldman Sachs held a Korea Storage Expert Network Webinar on July 28 and released the minutes on July 29. According to the participating experts, traditional DRAM prices will maintain strong "double-digit percentage" growth momentum this year, and HBM prices may see substantial increases or even double next year. The binding force of long-term agreements on the market is strengthening, and Chinese competitors pose limited threats in the short to medium term. Goldman Sachs maintains its buy rating on Samsung Electronics.

DRAM to Sustain Growth This Year, HBM Could Double Next Year

Experts provided a clear outlook on the DRAM price trend for this year.

According to the minutes, experts expect traditional DRAM prices to achieve "double-digit percentage" sequential growth in Q3 2026, which is consistent with the recent strong rebound in spot prices. Entering the fourth quarter, supported by ongoing supply shortages, experts believe that "double-digit sequential growth" remains possible.

They believe there is no significant increase on the supply side, while ongoing demand from AI servers continues to drive prices up, making price declines unlikely.

The HBM story is even more aggressive. Experts believe that, due to the rise in traditional DRAM prices, there is a possibility that HBM pricing could double next year. Goldman's own forecast is that Samsung HBM prices will see a year-on-year increase of 87% in 2027, a figure already higher than Bloomberg's consensus estimate of 52%.

Stronger LTA Binding Force; Over Half of Server DRAM Already Locked In

Whether prices can be realized depends on whether contracts can be upheld.

According to the minutes, experts point out that Long-Term Agreements (LTAs) contain multiple strong binding clauses: large advance payments, "take-or-pay" clauses, and penalties for contract cancellation. This means that once buyers sign, the exit cost is extremely high.

Currently, more than half of server DRAM is already covered by LTAs, and experts expect this proportion will continue to rise in the future.

What does this mean for storage manufacturers? Greater revenue visibility and stronger bargaining power in price negotiations. Goldman also points out in its investment thesis that, compared to the past, the binding force of this LTA cycle is stronger, which helps support Samsung's earnings outlook.

Chinese Manufacturers Unlikely to Become Threats in Short or Medium Term

The market has always worried about the expansion impact of Chinese storage manufacturers, but experts are cautious on this point.

According to the minutes, experts acknowledge that Chinese suppliers are actively expanding capacity, but believe "the likelihood of them becoming a clear threat to leading manufacturers in the near to medium term is low." The reason is that Chinese manufacturers still lag behind top players in terms of production yield and technology.

In other words, expanded capacity does not equal effective supply, and technological barriers are difficult to overcome in the short term.

Capacity Expansion Accelerates, But Effective Bit Growth Remains Limited

Capacity is expanding, but actual supply increase is not proportional.

According to the minutes, experts expect this year's capacity expansion to outpace historical levels. However, since HBM requires a higher wafer trade ratio—producing an equivalent amount of HBM consumes more DRAM wafers—the actual bit growth is expected to be lower than the historical average.

This is the key to understanding current supply and demand: while capacity appears to be expanding, the effective supply available for traditional DRAM is not increasing in tandem, which is the structural reason supporting continued price increases.

Hybrid Bonding Technology: Gradual Progression Rather Than Breakthrough Leap

On the HBM technology trajectory, hybrid bonding is viewed as the next-generation direction, but experts are cautious about its implementation pace.

According to the minutes, experts believe that as the number of stacked layers in DRAM chips increases, existing bonding technologies will face increasing challenges. However, at the same time, experts do not expect hybrid bonding to be adopted on a large scale ahead of schedule, as "achieving sufficient yield at mass production scale requires considerable time and effort."

Experts judge that storage manufacturers will explore a variety of technical paths, including fluxless bonding, while gradually promoting hybrid bonding integration rather than implementing it all at once.

Based on the above judgments, Goldman Sachs maintains its buy rating on Samsung Electronics common stock with a 12-month target price of 480,000 KRW and a preferred stock target price of 360,000 KRW.

The report points out that Samsung has already demonstrated "meaningful progress" in the HBM field, and coupled with higher shareholder return expectations, maintains a positive view on the stock. Major downside risks include: a significant deterioration in memory supply and demand, a sharp decline in smartphone business profit margins, and loss of market share in mobile OLEDs.