Shares of smartphone and memory chipmaker Samsung (SMSN.UK) gained 8% today and recorded their best session since 2021. The company recorded its first session of foreign investment inflows since October 29. Some investors attribute the surge to Nvidia's (NVDA.US) expected results next week (Nov. 20, after the US session); ahead of their release, we see mostly better sentiment among most companies, related to the semiconductor and related markets. The company relies more heavily than its other Korean competitor SK Hynix on Chinese suppliers, and the 60% tariffs proposed by the US on Chinese goods could dramatically raise its costs.
- Samsung's shares have lost for the past five days in a row, and the company is trading down about 30% this year, testing the September/October 2022 lows, on a wave of concerns around a potential new U.S. protectionist tariff policy unfavorable to the company and a mixed outlook for the HBM memory chip market, a wave of which Micron Technology (MU.US) also lost recently. According to Bloomberg data, the stock is trading at a double-digit discount to analysts' projected 1-year change in accounting book value.
- Protectionist policies proposed by Trump are not the only cause for concern. The company's results for the latest quarter slightly exceeded sales and operating profit forecasts, but profit from its semiconductor unit fell as much as 40% quarter-on-quarter, which the market attributed to tough competition with Taiwan's TSMC (TSM.US).
- Profit from the semiconductor segment in the third quarter was 3.84 trillion won, half that of SK Hynix. The company also warned on Oct. 31 that demand for smartphones and PCs remains low, and issued a disappointing Q4 operating profit forecast of 9.18 trillion won against more than 11.5 trillion won forecasts by analysts at LSEG. Samsung is the world's second-largest smartphone supplier. The company is expected to roll out high-performance HBM4, 6th-generation memory chips targeting AI in the second half of 2025.
Samsung shares (SMSN.UK) D1 interval
Samsung shares reacted at a key support level set by the 71.6 Fibo retracement of the 2016 upward wave, previous strong price reactions from 2020 and 2022, and a potential neckline in a head-and-shoulders formation (RGR). A drop below $900 could pave the way for the erasure of the entire 8-year upward impulse and a test of the area around $500 per share.
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