Samsung 2Q26 Preview: Micron’s Surprise Has Been Erased, Core OP Is the Real Test

Related context This is a follow-up to Micron FY3Q26 earnings, the NVIDIA elasticity framework for Samsung and SK Hynix, Samsung-Hynix-Micron parity, Samsung shareholder return and DS bonus buyback flow, and Samsung versus SK Hynix in HBM4E 12-high.

TL;DR

The number that matters in Samsung Electronics’ 2Q26 preview is not simply reported operating profit. The market needs to separate reported OP from Core OP, defined as reported OP plus the catch-up accrual for performance-based compensation.

At current prices, Micron’s FY3Q26 surprise has almost disappeared from Korean memory equities. Micron retained an 8.0% gain versus its pre-earnings price as of June 26. Samsung Electronics is down 5.9% versus the June 24 close based on June 29 intraday data, while SK Hynix is down 0.5%. The June 25 reaction was real, but most of it was erased by June 26 and June 29.

Samsung’s 2Q26 DRAM pricing is not the downgrade factor. Conventional DRAM contract prices are estimated to be up 58-63% QoQ, while mobile LPDDR is up 70-83% QoQ. A blended Samsung DRAM ASP assumption in the high-50% QoQ range is therefore not aggressive.

The reasonable range for 2Q26 reported OP is KRW 87-92 trillion, with a midpoint of KRW 89.5 trillion. Adding back KRW 15-17 trillion of catch-up bonus accrual implies Core OP of roughly KRW 104-106 trillion. In other words, the correct reading is not “earnings fell from the KRW 100 trillion expectation to KRW 89 trillion.” It is closer to “the memory core business reached more than KRW 100 trillion of profit power, but Samsung is recognizing excess-profit sharing costs in 2Q.”

The rating is Watchlist / Conditional Buy. Conditions are clear: reported OP should be at least KRW 87 trillion, Core OP should be at least KRW 102 trillion, the downgrade should be explained by accruals rather than DRAM/NAND price or shipment weakness, and 3Q26 OP durability around KRW 100 trillion should remain credible.

1. Price reaction: is Micron’s surprise still in Korea memory?

Micron reported FY3Q26 results after the U.S. close on June 24, 2026. For Korea, the clean baseline is the June 24 close.

Source: KII local daily price database for Korea and U.S. stocks; June 29 intraday Korea prices from Naver Finance API at 13:19 KST.

SK Hynix reacted most directly on June 25, rising 13.1%. But it has since nearly returned to its pre-event level. Samsung reacted 5.3% on June 25, then fell below the pre-event price. Micron still held an 8.0% gain as of June 26.

The conclusion is simple: at current prices, Korean memory has not retained Micron’s earnings read-through. It was reflected for one day, then erased by macro pressure, KOSPI overheat adjustment and company-specific uncertainty. The unreflected alpha is more visible in Samsung. SK Hynix is more of a pullback-and-reacceleration candidate.

2. What Micron confirmed

Micron FY3Q26 was a strong benchmark for the memory cycle. Revenue was USD 41.456 billion, non-GAAP EPS was USD 25.11, non-GAAP gross margin was 84.9%, and FY4Q26 guidance called for USD 50.0 billion revenue and USD 31.00 non-GAAP EPS. These are official company numbers. Micron FY3Q26 earnings release

The key read-throughs are:

This matters because Samsung now has to prove the same point with its own numbers: whether core memory profitability is already in the KRW 100 trillion range.

3. Reported OP versus Core OP

The working formula is:

Reported OP = accounting operating profit
Core OP = Reported OP + catch-up accrual for performance-based compensation

Base case:

The important point is that the expected OP cut is not driven by weaker DRAM or NAND assumptions. In the research input, Kiwoom’s 2Q26 OP estimate fell from KRW 100T in May to KRW 89T on June 29. But over the same period, DRAM ASP assumptions moved from +55% QoQ to +58% QoQ, and NAND from +72% QoQ to +75% QoQ. The downgrade is therefore better explained by bonus accruals, non-memory weakness, DX cost pressure, and continued Foundry/S.LSI losses.

4. Official 1Q26 base

Samsung’s 1Q26 official results provide the base:

Source: Samsung Electronics 1Q26 results.

DS operating profit of KRW 53.7T is the key base for the 2Q bonus accrual discussion. If 1Q did not fully accrue the new profit-sharing structure, 2Q can carry a catch-up cost.

5. DRAM pricing is supportive

The core conclusion is that a high-50% QoQ blended DRAM ASP assumption is reasonable. If reported OP comes in near KRW 89T, it should not be interpreted as DRAM price weakness unless Samsung’s own disclosures say otherwise.

6. Bonus accrual treatment

The existence of DS performance-based compensation is not new. The unsettled question is scale, timing and disclosure quality.

The two mistakes to avoid are: treating all bonus expense as a one-off, or treating all of it as structural deterioration. The catch-up portion matters for 2Q interpretation. The recurring profit-sharing structure matters for FY26/FY27 EPS and valuation.

7. Sell-side OP distribution

Investment framing:

8. Scenario model

Base midpoint:

9. Sensitivities

The OP downgrade from KRW 100T to KRW 89T despite stronger DRAM/NAND price assumptions implies roughly KRW 12-13T of cost, accrual and non-memory drag.

10. Reported OP and Core OP matrix

11. Catalysts

12. Valuation

The Kiwoom June 29 estimates summarized in the research input are:

A KRW 430,000 target price implies 9.9x 2026F EPS and 8.9x 2027F EPS. This is valid only if 3Q26 OP remains above KRW 100T, 2027 EPS stays near KRW 48,000, bonus and stock compensation are already embedded in EPS, HBM4/eSSD contributions are visible, and DRAM/NAND prices do not fall sharply.

13. Red Team and invalidation

Hard invalidation conditions:

Final view

At current prices, Micron’s surprise is almost gone from Samsung and SK Hynix. Samsung has returned to a price that barely embeds the Micron read-through. SK Hynix has almost returned to pre-event levels after a strong June 25 reaction.

Samsung’s opportunity is now specific: if 2Q preliminary results show that the headline OP decline is mostly bonus-accrual timing, while Core OP is above KRW 100T and 3Q durability remains intact, the stock can reprice.

The relative conclusion is straightforward:

One sentence: Micron’s earnings were reflected in Korean memory names for one day, but most of that effect has been erased. For Samsung, the next battle is not headline 2Q OP but Core OP above KRW 100 trillion and 3Q durability.