[Click eStock] "SK Hynix, Variable Arises Due to Xi'an Lockdown"

Positive Impact Expected on Semiconductor Market
Yujin Investment "SK Hynix Target Price Raised from 130,000 KRW to 160,000 KRW"

[Image source=Yonhap News]

[Asia Economy Reporter Gong Byung-sun] Xi'an, China, where Samsung Electronics and Micron factories are concentrated, is being locked down due to COVID-19. This is expected to positively impact SK Hynix due to disruptions in memory supply.

On the 3rd, Eugene Investment & Securities maintained a 'Buy' rating on SK Hynix and raised the target price from the previous 130,000 KRW to 160,000 KRW. The closing price on December 30 last year was 131,000 KRW.

A variable has emerged with the lockdown of Xi'an, China. The Chinese government is locking down Xi'an as part of its 'Zero COVID' policy ahead of the Beijing Winter Olympics in February this year. Since the increase in COVID-19 cases in Xi'an after December last year, highways passing through Xi'an have been completely blocked, and residents are prohibited from going out, effectively locking down the city. Moreover, cluster infections have occurred not only in Xi'an but also in Henan and Zhejiang provinces, making early easing of lockdown measures unlikely.

As a result, it is observed that this affects not only Samsung Electronics and Micron, which have semiconductor factories in Xi'an, but also the global semiconductor supply. Lee Seung-woo, a researcher at Eugene Investment & Securities, explained, "Samsung Electronics has a NAND production plant, and Micron has a DRAM back-end production plant in Xi'an," adding, "This will ultimately be a variable that raises assumptions about memory price fluctuations in the first quarter of this year."

Concerns are also raised that new COVID-19 variants will continue to emerge. With the appearance of the new Omicron variant, it is considered difficult to completely end COVID-19 in the future. However, this is expected to lead to supply issues, which will have a positive impact on the semiconductor industry itself. The researcher said, "We revise SK Hynix's operating profit forecast for this year from 12.2 trillion KRW to 13.9 trillion KRW."

Meanwhile, Eugene Investment & Securities estimated SK Hynix's sales in the fourth quarter of last year to be 12.5 trillion KRW, a 57% increase compared to the same period last year, and operating profit to be 4.2 trillion KRW, a 335% increase over the same period. These figures exceed the respective market consensus by 1.21% and 0.65%.

This content was produced with the assistance of AI translation services.