Global Storage Technology: This week's topic: NAND malfunction, Samsung labor strike, TCB sales below expectations

Theme of the week: NAND surprise,Samsung labor strike, TCB sales miss Industry Overview 16 May 2026 Kioxia’s guidance signals significantly strong NAND ASPs We were surprised by Kioxia’s more-than-doubled 1Q CY26 ASP QoQ, which was 20ppthigher than Korean chipmakers’results (80%+/-). We believe Kioxia’s SSD sales increase(including enterprise solutions) vs 4Q CY25 was one of the key contributors. Its 2Q CY26sales guidance (+74.5% QoQ) also implies upbeat NAND ASP (~70% QoQ increase vsconsensus / our estimate: sub-50%). Taiwan-based NAND module maker, PhisonElectronics (8299 TT), also reported super-cycle-level April results (sales +237% YoY;pre-tax profit margin 45%; net profit margin 38%). Overall, we acknowledge high upside EquityGlobalTechnology Simon Woo, CFA>>Research AnalystMerrill Lynch (Seoul)+82 2 3707 0554 Dai Shen>>Research AnalystMerrill Lynch (Hong Kong)dai.shen@bofa.com Samsung labor strike may lead to stronger contractpricing Vivek AryaResearch AnalystBofASvivek.arya@bofa.com Samsung Electronics isthe No. 1 supplier of DRAM and NAND. Thus, its potential laborstrike should affect global memory chip supply. Since the labor union is targeting only an18-day strike (21 May - 7 June) if special bonus payments (15% of OP) are not settled,the actual impact may theoretically be not significant. However, it usually takes at leasta few months to normalize fab operations after a full suspension. Of course, Samsung’smemory fab operations are mostly based on factory automation (not many people insideclean rooms), so we don’t expect a complete shutdown. That said, labor-intensivebackend packaging areas can be hit. Some OEMs and Big Tech companies may rush to Mikio Hirakawa>>Research AnalystBofAS Japan Matt Shin>>Research AnalystMerrill Lynch (Seoul)matt.shin2@bofa.com Exhibit1:DDR5 rose further this week,while DDR4and NAND prices stabilizedfollowing several weeks of declineSpot prices– DRAM and NAND Hanmi Semi’s 1Q TCB sales miss a manageable risk Hanmi Semiconductor (042700 KS) posted much weaker-than-expected 1Q results (salesonly W51bn; -65% YoY; OPM also low at 17% vs the normal 40-50% range). We believeweaker TCB orders from SK Hynix were the key contributor. However, 2Q/2H recovery iswell expected on a more diversified TCB (for not only HBM, but also 2.5D logic and evenHBF) and customers (not well disclosed, but we assume Hynix, Micron, ASE, TSMC, etc.).In fact, 1Q NP (W19bn vs W8bn OP) was upbeat due to FX gains. As such, our EPSestimates are mostly unchanged. Another Korean semis supply company, Soulbrain(357780 KS; HF etching materials for Samsung’s/Hynix’s chips), reported in-line 1Qresults, although growth and margins remained below trend (OPM only 17% vs normal20%+). This is consistent with the current memory cycle (weak bit growth or low ASP: Average selling price DDR4/5: 4th/5thgen double-data rate DRAMDRAM: Dynamic random-access memoryHBF: High bandwidth flashHBM: High bandwidth memory HF: Hydrogen fluorideNAND: Not-AND memoryOEM:Original equipment manufacturerOPM:Operating profit marginSSD: Solid-state driveTCB: Thermal compression bonding >> Employed by a non-US affiliate of BofAS and is not registered/qualified as a research analystunder the FINRA rules.Refer to "Other Important Disclosures" for information on certain BofA Securities entities that take responsibility for the information herein in particular jurisdictions.BofA Securities does and seeks to do business with issuers covered in its research Korea exports and Taiwan monthly sales trend Exhibit2:Remained flat MoM but still at record-high level in May(US$8.5bn) Exhibit3:YoY rebound still high at150% in May; already fourconsecutive months of triple-digit growth Korea semis exports–YoY change in first 10 days of month Exhibit 4: Robust MoM growth mostly led by memory names, such asNanya Tech (+40%), Transcend (+31%), Macronix/Winbond Exhibit 5: Also notably strong rebound seen from memory names andresilient growth across most companies including TSMC (+18%), *Nanya +717%, Transcend +594%, Phison +237%Source:Companies BofA GLOBAL RESEARCH Hanmi Semi (042700 KS; C-1-7; PO W500,000) Exhibit6:Weaker-than-expected 1Q results (sales only W51bn;-65% YoY, OPM also low at 17% vs normal 40-50% range); we believe weaker TCB ordersfrom Hynix was the key contributor. However, 2Q/2H recovery is well-expected on more diversified TCB (for not only HBM, but also 2.5D logic and evenHBF) and customers (not well disclosed, but we assume Hynix, Micron, ASE, TSMC, etc.)Hanmi Semi – Earnings revisions (2026-28E) Soulbrain (357780 KS; B-3-7; PO W370,000) Exhibit7:1Q results (sales W264bn, +26% YoY; GM 27%, OPM 17%) were broadly in-linewithconsensus/our estimate;accordingly, our 2026-27E EPS SK Square (402340 KS; C-1-7; PO W1,600,000) Exhibit8:Minimal 2026-27E EPS revisions as the majority of Square’s OP isdependenton Hynix’s NPdue to its 20% stakeSK Square–Earnings revisions (2026-28E) Memory spot/contract price trend Ex