[Click eStock] "SK Hynix, Positive Outlook for DRAM and NAND Markets"

On September 15, iM Securities raised its target price for SK Hynix from 2.8 million won to 3.8 million won, stating that while the high-bandwidth memory (HBM) market is expected to slow down next year, the DRAM and NAND flash memory markets are likely to remain stable as long as there is no economic recession. The investment rating was also upgraded from 'Neutral' to 'Buy'.

Demand for HBM next year is estimated to reach 40.7 billion GB, a 65% increase compared to this year. However, industry production is projected to be 41.3 billion GB (SK Hynix 18.8 billion, Samsung Electronics 12.5 billion, Micron 10 billion), slightly exceeding demand.

Song Myungseop, a researcher at iM Securities, stated, "As HBM production will continue to outpace demand next year, following this year, the already declining HBM prices are expected to continue their downward trend." He estimated that the average selling price (ASP) of HBM3E 12-layer products will fall by the mid-to-high 30% range compared to this year, and the price premium for HBM4 will be around 60%. In this scenario, SK Hynix's annual HBM operating margin next year is expected to fall from the mid-60% range this year to the mid-to-high 40% range.

Despite the decline in HBM profits, Song assessed that SK Hynix's operating profit next year will only see a slight decrease to 35.1 trillion won from this year's 38.1 trillion won. This is attributed to the overall DRAM and NAND demand growth rates, projected at 13.7% and 14.0% respectively, which are expected to be at least similar to or slightly higher than the industry's production growth rates.

Song also projected that sales of server DDR5 and high-capacity eSSD will increase, leading both DRAM and NAND shipments to exceed the company's guidance. He estimated SK Hynix's third-quarter revenue and operating profit this year at 24.2 trillion won (up 9% quarter-on-quarter) and 10.9 trillion won (up 18%), respectively. However, he pointed out that an economic recession and a slowdown in global liquidity remain as risk factors.

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