[R&E] Semiconductors Enter Super-Boom Orbit... Samsung Electronics Overwhelms Market with 57.2 Trillion Won Operating Profit in 1Q26

[R&E: Research & Epoch]

This is News Epoch's signature report, offering a perspective on a new era of investment through an integrated analysis of global financial data and domestic securities firm research.

Global Market Brief

The New York stock market closed mixed the previous day. The Dow Jones Industrial Average fell 0.18% to 46,584.46 points, while the S&P 500 Index rose 0.08% to 6,616.85 points, and the Nasdaq Composite Index closed 0.10% higher at 22,017.85 points. As U.S. durable goods orders for February decreased by 1.4% month-on-month, falling short of market expectations, concerns over an economic slowdown exerted downward pressure. Such concerns led to a decline in U.S. Treasury yields, with the 10-year Treasury yield dropping 3.8 basis points to 4.2931%. The decline in interest rates created a favorable environment for tech stocks, leading to slight gains in the S&P 500 and Nasdaq.

Meanwhile, as the war in Iran enters its sixth week, geopolitical risks are driving up oil prices. West Texas Intermediate (WTI) crude oil rose 0.48% to $112.95 per barrel, and Brent crude stood at $109.27 per barrel. Saudi Aramco's decision to raise the official selling price for Arab Light crude by $19.50 per barrel for May reflects supply uncertainty and strong demand, a factor that exacerbates global inflation pressures. The Dollar Index fell 0.34% to 99.643, and the Euro/Dollar rose 0.47% to 1.1595.

Domestic Market Overview

In the previous trading session, the domestic stock market saw a stark contrast in the direction of large-cap and small-to-mid-cap stocks. The KOSPI rose 0.82% to close at 5,494.78 points, whereas the KOSDAQ stayed at 1,036.73 points, down 1.02%. Despite the drop in U.S. Treasury yields, the New York Fed's 1-year consumer inflation expectations rising to 3.4% indicated persistent price pressures, which limited the indices' upside.

Domestic government bond yields also showed a divergence from the U.S. interest rate trend, with the 10-year yield rising 3.0 basis points to 3.755%. The KRW/USD exchange rate recorded 1,502.1 won, down 6.4 won from the previous day, but it still maintains a high level in the 1,500 won range, making exchange rate volatility management essential for import and export companies. Buying momentum centered on certain large-cap stocks, with SK Hynix rising 3.4% and LG Display rising 3%, driving the KOSPI, while the KOSDAQ widened its decline due to sluggishness in the bio sector.

Key Industry Issues and Insights

The global semiconductor industry has moved beyond a strong recovery in the memory cycle and entered a super-boom phase. Samsung Electronics reported sales of 133 trillion won and an operating profit of 57.2 trillion won in its preliminary first-quarter earnings announcement, exceeding the market consensus by over 30%. This earnings surprise was led by the DS division. The operating profit of the DS division recorded 53.0 trillion won, skyrocketing year-on-year, and achieved a high operating profit margin by demonstrating overwhelming quarterly price increases, especially in DRAM and NAND. This is the result of a combination of increased demand for high-value-added products such as High Bandwidth Memory (HBM) and an overall improvement in business conditions. Hana Securities analyzes that memory prices will continue their upward trend in the second quarter, making it highly likely to achieve an operating profit of 90 trillion won. Accordingly, SK Securities and Hyundai Motor Securities have upgraded their target prices for Samsung Electronics.

Other semiconductor companies are also showing concurrent strength. SK Hynix rose 3.4% on the previous trading day, and SK Securities raised its target price to 2 million won. Meritz Securities analyzed that PCB specialist Korea Circuit successfully turned a profit in its first-quarter operating profit. However, the non-memory sector recording a deficit of 1.2 trillion won and partially offsetting the strong growth of the memory sector remains a challenge.

In the electrical/electronics and IT parts sector, LG Electronics continues its growth trend based on the solid performance of its home appliance business. The first-quarter operating profit was 1.7 trillion won, exceeding market expectations. The strong sales of premium home appliances and the stable growth of the vehicle component business were evaluated as effective drivers. Hyundai Motor Securities raised the target price for LG Electronics by 27.2% to 140,000 won, reflecting expectations for earnings improvement.

In the global market, Broadcom (NASDAQ: AVGO) shares rose 6% due to the expansion of its partnership with Google (NASDAQ: GOOGL) and Anthropic. In contrast, the Netherlands' ASML (NASDAQ: ASML) declined on the possibility of the U.S. government regulating equipment exports to China, proving the influence of geopolitical risks on the technology sector.

Market Signals

• Samsung Electronics Earnings Surprise: Recorded an operating profit of 57.2 trillion won in 1Q26, exceeding the market consensus by 30.6%.

• Strong International Oil Prices: WTI rose to $112.95 per barrel, driven by geopolitical risks and the Saudi OSP hike.

• Decline in U.S. Treasury Yields: 10-year yield recorded 4.2931%, reflecting concerns over an economic slowdown such as decreased durable goods orders.

• LG Electronics Earnings Improvement: 1Q26 operating profit was 1.7 trillion won, up 32.9% year-on-year, led by premium home appliances and vehicle component businesses.

• DRAM Price Increase: Samsung Electronics' 1Q26 DRAM price increase margin estimated at 90%, securing a core driver for profitability improvement.

Epoch View: Investment Implications

The global economy is facing complex challenges of inflationary pressure from the prolonged war and the decoupling of interest rate trends in major countries. Even amid such uncertainty, the profit resilience of domestic semiconductor companies, represented by Samsung Electronics, is forming strong momentum. The explosive rise in memory prices and the subsequent earnings improvement are not temporary phenomena but the prelude to a 'super cycle' driven by the structural change of transitioning to the AI era. Despite rising raw material prices and interest rate volatility, companies with core technological capabilities and overwhelming market dominance are expected to become the definite central force driving the market's dynamism.

This content was generated by News Epoch's proprietary AI algorithm, which tracks and analyzes public data from research centers of major domestic securities firms and global financial media (CNBC, WSJ, MarketWatch, etc.) in real-time. It is an objective summary based on the collected data and clarifies that it is not a solicitation or recommendation for investment in any specific stock.