Currency shifts reshape the earnings outlook
Samsung Electronics and SK Hynix are heading into their third-quarter earnings announcements with lower profit forecasts from securities analysts. The main pressure is a rapid decline in the won-dollar exchange rate, even as record results from U.S. chipmaker Micron have reinforced expectations that demand for memory chips remains strong.
The revisions have not, however, led most analysts to become more pessimistic about the two companies’ shares. Most have maintained or increased their target prices (analysts’ estimates of what a stock could be worth) and kept their recommendations at “buy.” Their view is that the currency effect may weigh on one quarter’s results without overturning the longer-term outlook for the memory-chip business.
The central tension: near-term earnings forecasts are falling, while many analysts still expect the companies to benefit from strong AI-related demand and limited chip supply.
How a stronger won can reduce reported earnings
Samsung and SK Hynix sell a large share of their products overseas and receive much of their revenue in dollars. When the won strengthens against the dollar, each dollar of sales converts into fewer won. That can lower a company’s reported revenue and profit in its home currency, even if it sells the same number of chips at the same dollar price.
A simple example shows the effect: if a company earns $1 million abroad, it receives fewer won for that revenue when the dollar exchange rate falls. Companies may reduce some of this risk through financial arrangements or by matching dollar expenses with dollar income, but exchange-rate changes can still affect reported results.
The won-dollar rate had climbed as high as about 1,550 won per dollar before dropping by more than 200 won over roughly two months, according to the article. Analysts cited that move as a major reason for their revised estimates. They also pointed to higher component costs and expenses in businesses beyond the core semiconductor operations.
What changed in the forecasts
All seven securities firms that published Samsung Electronics research during the week lowered their estimates for the company’s third-quarter operating profit. Operating profit (the amount earned from a company’s main business before interest and taxes) fell by an average of about 8.4% across those revisions.
The firms’ average estimate moved from approximately 11.42 trillion won to 10.46 trillion won. One firm made a larger cut, lowering its forecast from about 11.65 trillion won to 10.17 trillion won. Some analysts also reduced their third-quarter estimates for SK Hynix ahead of its results, which were expected later in the month.
These are forecasts, not final results. Companies can still report figures above or below analysts’ expectations, and changes in exchange rates, prices and costs before the earnings announcement may affect the final numbers.
Why AI demand remains a key support
Despite the currency-related cuts, many analysts believe the long-term case for memory chips remains intact. AI systems rely on large volumes of data, and both training advanced models and answering user requests require fast access to that information. This creates demand for memory chips used in servers and other data-center equipment.
The industry’s focus is also broadening. AI development is moving beyond training (feeding data into a model so it can learn patterns) toward inference (using a trained model to generate answers or make predictions) and AI agents (software that can carry out tasks with less step-by-step human direction). Analysts argue that these uses could expand the number of applications requiring memory, rather than reduce the need for it.
One analyst’s assessment was that memory remains important as AI shifts from training toward inference and agent-based services, potentially widening the range of uses for the chips.
Micron’s recent report of record quarterly and annual results has added weight to the optimistic view. During its earnings call, the U.S. company also said it was difficult to predict when the shortage of memory-chip supply would ease. If demand continues to outpace the industry’s ability to produce chips, prices may rise or remain firm, supporting revenue and margins for suppliers.
A possible supply constraint
Building new chip-production capacity takes time, investment and specialized equipment. As a result, manufacturers cannot always respond immediately when demand rises. Some analysts say memory supply may be tighter in 2027 than in 2026, a forecast that suggests the industry could face constraints even as companies work to expand production.
That outlook is not guaranteed. If AI infrastructure spending slows, or if chipmakers add capacity faster than demand grows, the balance could shift. Investors will therefore be watching not only this quarter’s results but also company guidance on customer demand, production plans and prices.
Target prices hold despite lower profit estimates
Most analysts have kept their target prices for Samsung Electronics and SK Hynix, and one or more firms have raised their assessments. The article reported one exception: a securities firm lowered its target price for SK Hynix. The available information did not provide specific target-price figures, so it is not possible to compare the analysts’ individual valuations here.
The difference between a lower profit forecast and an unchanged target price reflects different time horizons. A near-term estimate focuses on earnings over the coming quarter, while a target price may also incorporate expectations for future chip prices, demand growth and company strategy. Analysts who see the exchange-rate effect as temporary may judge that it does not justify changing their longer-term valuation.
Some also expect rising DRAM prices to help offset the currency pressure. DRAM (a type of fast, temporary memory used in computers and servers) is a major part of the memory-chip market. Stronger prices can improve a supplier’s revenue per chip, although the benefit depends on production costs, customer demand and the mix of products sold.
Shareholder returns and the risks ahead
Analysts also pointed to shareholder-return plans as a possible source of support for the stocks. Shareholder returns (ways a company gives value back to investors, such as dividends or share buybacks) can make shares more attractive and may help limit declines when the market becomes cautious.
Investors are expected to pay attention to details announced with the earnings results. A clear plan for dividends or buybacks could matter alongside the companies’ forecasts for memory demand and pricing. Analysts cautioned, however, that shareholder returns cannot erase weaker operating results or eliminate broader market risks.
Key issues to watch include:
- Exchange rates: further moves in the won-dollar rate could change the value of overseas sales when reported in won.
- Memory prices: higher DRAM prices could support revenue, while falling prices would weaken that benefit.
- AI investment: slower spending on data centers could reduce demand for advanced memory chips.
- Costs outside semiconductors: rising component prices and expenses in other divisions may weigh on overall profit.
- Supply growth: new production capacity could ease shortages, but building and bringing new facilities online takes time.
For investors, the key question is whether the forecast cuts reflect a temporary currency headwind or the beginning of a broader slowdown in chip demand.
What the upcoming results may clarify
The third-quarter announcements should show how much of the forecast reductions came from exchange rates, higher costs or changes in demand. Company guidance may also offer clues about memory pricing, AI-related orders and the expected balance between supply and demand in the coming year.
Micron’s record performance points to a strong market backdrop, but it does not guarantee that Samsung and SK Hynix will deliver the same results. Their product mix, customer relationships, operating costs and exposure to currency movements differ. The companies’ earnings reports will help investors assess how those differences are affecting each business.
For now, analysts’ mixed signals tell a two-part story: near-term profits are under pressure, but confidence in the longer-term AI and memory-chip outlook has largely held. Whether that confidence is justified will depend on the next set of results—and on whether demand, prices and supply remain favorable.
