Samsung Electronics shares drop after Morgan Stanley cuts view, sees chip boom peaking

SEOUL (Reuters) – Samsung Electronics Co Ltd’s (005930.KS) shares fell more than 4 percent to a one-month low on Monday after Morgan Stanley cut its recommendation on the South Korean tech giant, citing concerns that a boom in memory chips is likely to peak soon.

A so-called memory chip “super-cycle” of increased prices due to demand for more firepower in servers and smartphones was the major driver of Samsung’s record third-quarter profit of 14.5 trillion won ($12.91 billion) announced in October, with investors focused on how long it will last.

A Morgan Stanley research report issued on Sunday downgraded its view of Samsung to “equal weight” from “overweight” and trimmed its price target on the stock by 3.4 percent to 2.8 million won, saying its earnings in the memory segment are not seen growing materially next year.

Shares of SK Hynix (000660.KS) fell as much as 3.6 percent, the biggest intra-day drop since late October.

Samsung Electronics said in October that it expects a continued tight supply-demand position in the NAND and DRAM space in 2018.