HSBC: Long-term supply agreements driving revaluation, raising target prices for Samsung Electronics, SK Hynix, and Kioxia.

J.P. Morgan's report pointed out that long-term supply agreements have paved the way for semiconductor manufacturers to move towards a new valuation framework. The logic is that buyers are not only afraid of price increases, but also afraid of not being able to buy; sellers are not only looking to increase prices, but also want to see order visibility before investing heavily in capital expenditures. Calculations show that even under the assumption of aggressive expansion, the supply of AI storage between 2026 and 2030 still cannot meet the demand of cloud manufacturers, with a gap equivalent to the production capacity of about 450,000 wafers per month. As the proportion of LTAs in the shipment structure of storage manufacturers increases, the P/B valuation tool that has been used for decades is outdated and must switch to a P/E framework. The bank raised its target price for Samsung Electronics to 480,000 Korean won, SK Hynix's target price soared from 1.8 million Korean won to 3 million Korean won, and Japan's Kioxia's target price doubled from 38,000 yen to 80,000 yen, making it the highest in the market.