Samsung still cruising on record valuation thanks to chip optimism

2020 could have gone better for Samsung, to say the least. But fortunately for the Korean company, the stock market cares little about the present. Instead, investors are always agonizing over short- and medium-term outlooks. Most would even include long-term forecasts here, but only in principle. In practice, you have Tesla, as well as an endless stream of other everyday reminders that no one – absolutely no one – can consistently predict stock market fluctuations.

Cue Samsung’s current situation in which optimism surrounding the company’s prospects has never been greater relative to inflation, yet it’s difficult to think of a worse year for the majority of its many businesses. Including Samsung Electronics, by far the flagship component of Samsung Group.

Is Samsung’s chip leadership really that undisputed?

Namely, the sales of smartphones and most other devices bar the defiant smart televisions have been down across the board this year. As were Samsung’s manufacturing capacities, for obvious reasons. The current optimism is entirely concentrated on the prospects of Samsung’s foundry division. As silicon manufacturing is expected to undergo yet another phase of explosive growth. And as far as industries most capable of monetizing consistently high demand levels go, chipmaking is among the most lucrative economic activities on the planet.

This is why Samsung has been riding an all-time high valuation for nearly a  month by now, with that trend showing no signs of slowing down. The company’s shares peaked at 70,500 won several hours ago before ending the day on the South Korean Stock Exchange with a 70,000 won (≈$64) valuation. And while the level of global competition may seem to be even lower relative to last year when Samsung was threatened by Intel, the latter’s sale of its NAND memory unit to SK Hynix made Samsung’s neighbor all the more dangerous of a rival.

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