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Commercial Mortgage-Backed Securities (CMBS) saw a dramatic rebound of private label CMBS issuance in 2024
and massive tightening of spreads on the back of sustained cooling of inflation and the kickoff of Fed easing cycle.
CRE market sentiment improved significantly despite elevated distress in maturity refinance and office
fundamental. We are bullish on CRE and CMBS market for 2025 as the Fed continues the easing cycle and the
soft landing remains the base case for the economy but would be cautious on the risk of sticky inflation, new
administration policies, and hotter than expected jobs data, which may cause disruption and turbulence for CRE
fundamentals and financing conditions.
Collateralized Loan Obligations (CLO) had a banner year in 2024, and we see a lot of market optimism for CLOs.
While the strength of the market is poised to carry over to 2025, the new year will ultimately be shaped by the
economic trajectory and evolving monetary and fiscal policies. We expect credit condition to be steady or improve
under the baseline scenario, which would be supportive to continued growth in CLO issuance and spread
tightening. On the other hand, the stress scenario may sour investor sentiment and pressure corporate profit
margin and interest coverage ratio. However, the higher-for-longer rate environment could benefit CLO demand as
floating rate investments retain their appeal, mitigating the downside risk.

Commercial Mortgage-Backed Securities (CMBS) saw a dramatic rebound of private label CMBS issuance in 2024
and massive tightening of spreads on the back of sustained cooling of inflation and the kickoff of Fed easing cycle.
CRE market sentiment improved significantly despite elevated distress in maturity refinance and office
fundamental. We are bullish on CRE and CMBS market for 2025 as the Fed continues the easing cycle and the
soft landing remains the base case for the economy but would be cautious on the risk of sticky inflation, new
administration policies, and hotter than expected jobs data, which may cause disruption and turbulence for CRE
fundamentals and financing conditions.
Collateralized Loan Obligations (CLO) had a banner year in 2024, and we see a lot of market optimism for CLOs.
While the strength of the market is poised to carry over to 2025, the new year will ultimately be shaped by the
economic trajectory and evolving monetary and fiscal policies. We expect credit condition to be steady or improve
under the baseline scenario, which would be supportive to continued growth in CLO issuance and spread
tightening. On the other hand, the stress scenario may sour investor sentiment and pressure corporate profit
margin and interest coverage ratio. However, the higher-for-longer rate environment could benefit CLO demand as
floating rate investments retain their appeal, mitigating the downside risk.

Samsung Electronics (OTCPK:SSNLF) warned of slower demand for its AI chips in the first quarter of 2025, partly due to U.S. export restrictions, while announcing its first quarter results on Friday.

Shares of the South Korea tech giant fell about 2% on the Korea Exchange on Friday.

AI chips outlook:

"That said, we do expect a temporary constraint on HBM [high-bandwidth memory] sales in the first quarter, not only due to the recent U.S. government announcement on export controls and AI chips, but also because after we announced our product optimization plans, there's been a shift among major customers who are opting to wait for enhanced HBM3E product which may potentially result in a temporary gap in HBM demand," said Sooncheol Park, Samsung's head of Corporate Management Office and CFO on the company's earnings call.

The market for HBM is led by South Korean companies SK hynix and Samsung, and to a lesser extent by American chipmaker Micron Technology (MU). SK hynix is the major supplier of these chips to Nvidia (NVDA), which makes graphics processing units or GPUs, used for AI products. HBMs along with GPUs or AI accelerators process large amounts of data, and packaging is vital in connecting these two.

Park noted that since the third quarter, the company's HBM3E, 8-stack and 12-stack layer products have been in mass production and sales. In the fourth quarter, Samsung expanded its HBM3E supply to multiple GPU providers and data center clients with HBM3E sales exceeding HBM3 sales, according to Park.

Park added that, "though we are planning to start mass production and initiate supply for some clients starting from late Q1 and more noticeable ramp in the supply of the optimized product is likely to come later with full swing delivery starting from the second quarter onwards."

General outlook: Samsung said that in the first quarter of 2025, overall earnings improvement may be limited due to weakness in the semiconductors business, but the company is aiming for growth through increased sales of smartphones with differentiated AI experiences, and premium products in the Device eXperience, or DX, Division.

Samsung noted that for the full year 2025, it plans to enhance technological and product advantages in AI, and continue to meet future demand for high-value-added products and drive sales growth in premium segments.

Samsung said that in 2025, overall memory market demand is expected to recover from the second quarter. The Memory Business is reducing the portion of legacy DRAM and NAND products to align with market demand and accelerating the migration to cutting-edge nodes, the company added.

The unit will optimize its portfolio by increasing the portion of high value-added products such as HBM, DDR5, LPDDR5x, GDDR7 and server SSDs based on advanced process nodes, according to the company.

Q4 metrics: Samsung confirmed its operating profit of KRW6.5T in the fourth quarter, growing about 132% year over year, but down around 29% from the third quarter of 2024. Fourth quarter revenue rose about 11.8% year-over-year to KRW79.10T, while declining around 4.1%v third quarter of 2024.

Samsung had reported preliminary results for the fourth quarter earlier this month.

Memory Business: The Device Solutions unit saw revenues soar 39% year-over-year to KRW30.1T. Under this, the Memory business jumped 46% year-over-year to KRW23T.

The company said the Memory Business achieved record-high fourth-quarter revenue, backed by a higher blended DRAM average selling price due to the increased sales of HBM and high-density DDR5 for servers.

Foundry Business: Samsung said the overall profit for the Foundry Business fell due to lower utilization rates and higher research and development expenses for advanced-node technology. Its 2nm Gate-All-Around, or GAA, technology is under active development, with the design-kit already distributed to customers for product design, while the 4nm process is mass producing High-performance computing, or HPC, products based on stable yields.

The company noted that in the first quarter of 2025, earnings are expected to remain weak due to sluggish mobile demand and fixed-cost burden due to lower utilization rates. The Foundry Business will focus on advancing leading-edge process development and enhancing process maturity to expand opportunities in AI and HPC applications and customer engagement for advanced nodes, according to the company.

Digital eXperience: Sales from the DX segment rose 2% year-over-year to KRW40.5T, but fell 10% compared to the third quarter of 2024.

Samsung Display Corporation: The unit's revenue fell 16% year-over-year to KRW8.1T.

System LSI Business: The company said fourth quarter earnings declined due to weak mobile demand and higher R&D expenses. In the first quarter of 2025, earnings would stay weak due to delayed flagship System-on-chip (SoC) entry, the company noted.

Samsung Electronics (OTCPK:SSNLF) warned of slower demand for its AI chips in the first quarter of 2025, partly due to U.S. export restrictions, while announcing its first quarter results on Friday.

Shares of the South Korea tech giant fell about 2% on the Korea Exchange on Friday.

AI chips outlook:

"That said, we do expect a temporary constraint on HBM [high-bandwidth memory] sales in the first quarter, not only due to the recent U.S. government announcement on export controls and AI chips, but also because after we announced our product optimization plans, there's been a shift among major customers who are opting to wait for enhanced HBM3E product which may potentially result in a temporary gap in HBM demand," said Sooncheol Park, Samsung's head of Corporate Management Office and CFO on the company's earnings call.

The market for HBM is led by South Korean companies SK hynix and Samsung, and to a lesser extent by American chipmaker Micron Technology (MU). SK hynix is the major supplier of these chips to Nvidia (NVDA), which makes graphics processing units or GPUs, used for AI products. HBMs along with GPUs or AI accelerators process large amounts of data, and packaging is vital in connecting these two.

Park noted that since the third quarter, the company's HBM3E, 8-stack and 12-stack layer products have been in mass production and sales. In the fourth quarter, Samsung expanded its HBM3E supply to multiple GPU providers and data center clients with HBM3E sales exceeding HBM3 sales, according to Park.

Park added that, "though we are planning to start mass production and initiate supply for some clients starting from late Q1 and more noticeable ramp in the supply of the optimized product is likely to come later with full swing delivery starting from the second quarter onwards."

General outlook: Samsung said that in the first quarter of 2025, overall earnings improvement may be limited due to weakness in the semiconductors business, but the company is aiming for growth through increased sales of smartphones with differentiated AI experiences, and premium products in the Device eXperience, or DX, Division.

Samsung noted that for the full year 2025, it plans to enhance technological and product advantages in AI, and continue to meet future demand for high-value-added products and drive sales growth in premium segments.

Samsung said that in 2025, overall memory market demand is expected to recover from the second quarter. The Memory Business is reducing the portion of legacy DRAM and NAND products to align with market demand and accelerating the migration to cutting-edge nodes, the company added.

The unit will optimize its portfolio by increasing the portion of high value-added products such as HBM, DDR5, LPDDR5x, GDDR7 and server SSDs based on advanced process nodes, according to the company.

Q4 metrics: Samsung confirmed its operating profit of KRW6.5T in the fourth quarter, growing about 132% year over year, but down around 29% from the third quarter of 2024. Fourth quarter revenue rose about 11.8% year-over-year to KRW79.10T, while declining around 4.1%v third quarter of 2024.

Samsung had reported preliminary results for the fourth quarter earlier this month.

Memory Business: The Device Solutions unit saw revenues soar 39% year-over-year to KRW30.1T. Under this, the Memory business jumped 46% year-over-year to KRW23T.

The company said the Memory Business achieved record-high fourth-quarter revenue, backed by a higher blended DRAM average selling price due to the increased sales of HBM and high-density DDR5 for servers.

Foundry Business: Samsung said the overall profit for the Foundry Business fell due to lower utilization rates and higher research and development expenses for advanced-node technology. Its 2nm Gate-All-Around, or GAA, technology is under active development, with the design-kit already distributed to customers for product design, while the 4nm process is mass producing High-performance computing, or HPC, products based on stable yields.

The company noted that in the first quarter of 2025, earnings are expected to remain weak due to sluggish mobile demand and fixed-cost burden due to lower utilization rates. The Foundry Business will focus on advancing leading-edge process development and enhancing process maturity to expand opportunities in AI and HPC applications and customer engagement for advanced nodes, according to the company.

Digital eXperience: Sales from the DX segment rose 2% year-over-year to KRW40.5T, but fell 10% compared to the third quarter of 2024.

Samsung Display Corporation: The unit's revenue fell 16% year-over-year to KRW8.1T.

System LSI Business: The company said fourth quarter earnings declined due to weak mobile demand and higher R&D expenses. In the first quarter of 2025, earnings would stay weak due to delayed flagship System-on-chip (SoC) entry, the company noted.

Samsung Electronics (OTCPK:SSNLF) warned of slower demand for its AI chips in the first quarter of 2025, partly due to U.S. export restrictions, while announcing its first quarter results on Friday.

Shares of the South Korea tech giant fell about 2% on the Korea Exchange on Friday.

AI chips outlook:

"That said, we do expect a temporary constraint on HBM [high-bandwidth memory] sales in the first quarter, not only due to the recent U.S. government announcement on export controls and AI chips, but also because after we announced our product optimization plans, there's been a shift among major customers who are opting to wait for enhanced HBM3E product which may potentially result in a temporary gap in HBM demand," said Sooncheol Park, Samsung's head of Corporate Management Office and CFO on the company's earnings call.

The market for HBM is led by South Korean companies SK hynix and Samsung, and to a lesser extent by American chipmaker Micron Technology (MU). SK hynix is the major supplier of these chips to Nvidia (NVDA), which makes graphics processing units or GPUs, used for AI products. HBMs along with GPUs or AI accelerators process large amounts of data, and packaging is vital in connecting these two.

Park noted that since the third quarter, the company's HBM3E, 8-stack and 12-stack layer products have been in mass production and sales. In the fourth quarter, Samsung expanded its HBM3E supply to multiple GPU providers and data center clients with HBM3E sales exceeding HBM3 sales, according to Park.

Park added that, "though we are planning to start mass production and initiate supply for some clients starting from late Q1 and more noticeable ramp in the supply of the optimized product is likely to come later with full swing delivery starting from the second quarter onwards."

General outlook: Samsung said that in the first quarter of 2025, overall earnings improvement may be limited due to weakness in the semiconductors business, but the company is aiming for growth through increased sales of smartphones with differentiated AI experiences, and premium products in the Device eXperience, or DX, Division.

Samsung noted that for the full year 2025, it plans to enhance technological and product advantages in AI, and continue to meet future demand for high-value-added products and drive sales growth in premium segments.

Samsung said that in 2025, overall memory market demand is expected to recover from the second quarter. The Memory Business is reducing the portion of legacy DRAM and NAND products to align with market demand and accelerating the migration to cutting-edge nodes, the company added.

The unit will optimize its portfolio by increasing the portion of high value-added products such as HBM, DDR5, LPDDR5x, GDDR7 and server SSDs based on advanced process nodes, according to the company.

Q4 metrics: Samsung confirmed its operating profit of KRW6.5T in the fourth quarter, growing about 132% year over year, but down around 29% from the third quarter of 2024. Fourth quarter revenue rose about 11.8% year-over-year to KRW79.10T, while declining around 4.1%v third quarter of 2024.

Samsung had reported preliminary results for the fourth quarter earlier this month.

Memory Business: The Device Solutions unit saw revenues soar 39% year-over-year to KRW30.1T. Under this, the Memory business jumped 46% year-over-year to KRW23T.

The company said the Memory Business achieved record-high fourth-quarter revenue, backed by a higher blended DRAM average selling price due to the increased sales of HBM and high-density DDR5 for servers.

Foundry Business: Samsung said the overall profit for the Foundry Business fell due to lower utilization rates and higher research and development expenses for advanced-node technology. Its 2nm Gate-All-Around, or GAA, technology is under active development, with the design-kit already distributed to customers for product design, while the 4nm process is mass producing High-performance computing, or HPC, products based on stable yields.

The company noted that in the first quarter of 2025, earnings are expected to remain weak due to sluggish mobile demand and fixed-cost burden due to lower utilization rates. The Foundry Business will focus on advancing leading-edge process development and enhancing process maturity to expand opportunities in AI and HPC applications and customer engagement for advanced nodes, according to the company.

Digital eXperience: Sales from the DX segment rose 2% year-over-year to KRW40.5T, but fell 10% compared to the third quarter of 2024.

Samsung Display Corporation: The unit's revenue fell 16% year-over-year to KRW8.1T.

System LSI Business: The company said fourth quarter earnings declined due to weak mobile demand and higher R&D expenses. In the first quarter of 2025, earnings would stay weak due to delayed flagship System-on-chip (SoC) entry, the company noted.

https://www.lseg.com/content/dam/lseg/en_us/documents/reports/2025-year-ahead-us-outlook-funds.pdf

https://www.lseg.com/content/dam/lseg/en_us/documents/reports/2025-year-ahead-us-outlook-funds.pdf