The US$1.6 billion Ninety One Asian Equity Fund is increasing its investment in Samsung Electronics, viewing the stock as undervalued due to investor mispricing.

Fund co-manager Charlie Linton said Samsung lags behind SK Hynix in high-bandwidth memory (HBM) chips, but its potential remains underappreciated.

The fund has gained 15% year-to-date, aided by a March 2024 purchase of Pop Mart, whose shares surged 600% after being identified as undervalued.

Samsung’s shares have increased by 20% this year but still trail SK Hynix, whose stock has risen 60% due to supplying HBM chips to Nvidia.

Linton anticipates that Samsung’s next-generation DRAM chip production could help narrow the gap with its competitors.

The fund also holds major stakes in Chinese firms, including Naura Technology, which is benefiting from China’s semiconductor localization push.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Memory chips are experiencing extraordinary growth, creating potential value opportunities

Memory products saw a remarkable 78.9% increase in sales in 2024, with DRAM products alone growing by 82.6% according to industry data 1.

This growth explains why Ninety One’s fund manager sees value in Samsung despite it lagging behind SK Hynix in high-bandwidth memory (HBM) chips used in AI applications.

The broader semiconductor market reached $627.6 billion in 2024, marking a 19.1% increase from 2023, with projections to grow to $697 billion in 2025 1.

Samsung and SK Hynix have been competing in advanced memory development for years, with both companies working on successive generations of high-bandwidth memory technology that powers AI applications 2.

The fund’s interest in Samsung despite its stock underperforming SK Hynix (20% vs. 60% growth) aligns with its quantitative approach that looks beyond current market sentiment to identify undervalued opportunities.

2️⃣ Asia continues to dominate the semiconductor industry’s future growth trajectory

Asia Pacific is projected to be the fastest-growing market for global technology spending in 2025, with a growth rate of 7.6%, driven largely by semiconductor demand 3.