On Monday, Samsung announced shares dropping more than 4% which marked a one-month low after Morgan Stanley cut their recommendation on the tech giant due to concerns over increasing sales in memory chips that is likely to rise soon. The company reported third quarter profit of $12.91 billion that was mostly driven by increased prices of their memory chip due to demand for more power in smartphones and servers. However, Morgan Stanley chopped their price target on the stock by 3.4% to 2.8 million won believing that earnings will not grow by next year.
Following this outlook, Samsung shares fell 4.2% at 2.66 million won. Still, the chip maker is less likely to be affected by the trends in chip prices than rivals such as the world’s second largest memory chip maker, SK Hynix Inc. Samsung is a strong candidate for their NAND chips and expects a solid supply demand position next year.
“The reaction is a bit over-sensitive, as all this was known,” said Greg Roh, analyst at HMC Investment & Securities according to Reuters.
“We all knew that NAND prices are going down, which is actually needed to encourage sound demand and increase shipments. And Samsung is strong in NAND chips for data center SSDs (solid state drives) which will be less affected,” Roh said.