Business analysts are hopeful about the South Korean multinational conglomerate company, Samsung, after they unveiled its newest Galaxy Z Fold 2 on Tuesday. Nvidia, a U.S. semiconductor company, also announced that the electronic giant company would manufacture its next-generation chip.
Samsung’s shares are seen at the trading of 70,376.32 Korean won ($59.35) in the coming 12 months. According to the average target price gathered by Refinitiv, this represents a 29% rise from Wednesday’s trading price. Daiwa Capital Markets SK Kim has a 1-year target of 82,000 Korean won, which means a greater than 50% upside from the trading price on Wednesday.
Analysts cite the next-generation launching of smartphones, new orders for Samsung’s chip manufacturing operations, and recovery in memory pricing in 2021 as factors behind their optimism.
On Tuesday, Nvidia announced the GeForce RTX 30 Series of graphics processing units (GPUs) for P.C. gaming. The chips offer a more realistic graphic on-screen with the aid of “ray-tracing” technology, which simulates light reacting with objects around it. Moreover, Nvidia also said that they’d be working with Samsung to manufacture these chips using an 8-nanometer process specially customized for these semiconductors.
Daiwa’s Kim sees this as a positive opportunity for Samsung. He told CNBC that they are expecting a $1billion-worth deal in revenue for Samsung with Nvidia. Samsung’s semiconductor business is a vital aspect of the company and accounts for two-thirds of its operating profit within the second quarter of 2020. It comprises the company’s foundry business and the NAND and DRAM chips production used in smartphones and laptops.
Moreover, Samsung is also expected to drive earning with its latest foldable phones Galaxy Z Fold 2. It will launch on the 18th of September for $1,999. Senior analyst at CLSA Sanjeev Rana said that foldable phones will remain a “niche” device for now and expects Samsung’s sales to increase every year.
Meanwhile, one of Samsung’s strongest rivals, Huawei, is struggling with smartphones. Last year, the U.S. banned the Chinese phone giant’s access to Google services and mobile operating systems. In May, Washington revised the FDPR (foreign-produced direct product rule) requiring foreign manufacturers that utilize American chipmaking devices to obtain a license before they sell semiconductors to Huawei. This move threatens to remove Huawei from the key chips it needs for its products.
Although Huawei is the leading smartphone player by market shares in the second quarter of the year, driven by the rise of shipments in China, its international markets have plummeted.