"Stage Set for Samsung and SK hynix: How High Can They Climb?... Semiconductor Boom Drives 500 Trillion Won Outlook"

Hynix Achieves Record 72% Operating Margin
Secures Price Bargaining Power by Expanding HBM Sales
Maximizing Profitability in a Seller’s Market
“Aim for Quality Over Speed” with Aggressive Capacity Expansion

As the semiconductor supercycle continues, memory manufacturers are also posting strong performance. Industry insiders are predicting that the combined annual operating profit of SK hynix and Samsung Electronics could reach the 500 trillion won range this year. SK hynix is believed to have maximized its sales by focusing on high value-added products, in addition to benefiting from rising semiconductor prices. With aggressive expansion of production capacity also underway, the company is expected to maintain its upward trend in performance at least until next year.

According to the securities industry on April 23, projections indicate that SK hynix's annual operating profit could reach as high as 256 trillion won this year. Despite ongoing challenges such as the Middle East war and tariff uncertainties, memory companies have entered a historic boom period, fueled by the expansion of demand for artificial intelligence (AI). Even as tensions between the United States and Iran persist, major U.S. tech companies such as Alphabet (Google), Amazon, Meta, and Microsoft are ramping up investments in data centers. The investment plans announced this year by these four companies alone amount to $665 billion (approximately 1,000 trillion won).

SK hynix, in particular, has significantly increased profitability by focusing its product mix on high value-added items like high bandwidth memory (HBM). The company’s operating margin, a measure of sales performance, soared to 72%, far surpassing the previous record of 58% posted in the fourth quarter of last year. Industry experts note that SK hynix has succeeded in boosting HBM sales and securing pricing power in negotiations with major clients. The key driver of this revenue growth is the HBM3E. NVIDIA’s leading accelerators (H200, Blackwell series) currently primarily use HBM3E 8-layer and 12-layer products. It is widely believed that SK hynix is securing stable earnings through HBM3E, the most sought-after product by customers.

Aerial view of the Cheongju M15X new plant. SK hynix.

Furthermore, as demand for AI development increases and memory supply falls short, a 'supplier's market' has emerged, allowing profitability to be maximized. According to industry sources, in the first quarter of this year, SK hynix notified major clients of more than a 100% price increase for general DRAM compared to the fourth quarter of last year. DRAM prices are expected to rise by nearly another 50% in the second quarter. It is reported that HBM accounts for about 30% of SK hynix’s total DRAM shipments, while the remainder consists of general-purpose products.

The increase in NAND flash prices is also believed to have contributed to the company’s performance. As supply has decreased while demand has surged, NAND prices in the first quarter reportedly rose by 55-60% compared to the previous quarter. Accordingly, SK hynix’s NAND operating profit, which was less than 2 trillion won last year, is expected to exceed 40 trillion won this year.

The high exchange rate caused by the Middle East war has actually been beneficial for SK hynix, since most semiconductor exports are settled in U.S. dollars. However, depending on whether the war becomes prolonged, the impact on raw material prices in the semiconductor industry will also be determined.

"Strike While the Iron Is Hot"... Aggressive Capacity Expansion

SK hynix is focusing on expanding capacity to respond to the explosive increase in memory demand. At the new Cheongju M15X plant, the company reportedly plans to increase monthly wafer input from an average of 10,000 units this month to as many as 80,000 units by next year. Once the M15 plant becomes operational, SK hynix’s DRAM production is expected to increase by 10-15% compared to current levels. Since the production line centers on advanced processes, it is expected to contribute even more to profitability. Additionally, construction of the first fab at the Yongin Semiconductor Cluster is accelerating, with the cleanroom scheduled to open in February 2027. The company has moved up the cleanroom opening from the originally planned May next year to February.

The industry expects technology competition to intensify this year as mass production of HBM4 gets underway. The race to secure the market is also expected to expand to HBM4E, HBM5, and custom HBM in the future. However, Samsung Electronics has recently struck back in the HBM competition, quickly closing the gap. In February, Samsung Electronics began mass production of HBM4 and, in March, was selected as the priority supplier of HBM4 for AMD’s AI accelerators. Nevertheless, SK hynix is focusing on stability and maturity rather than simply speed. The company is actively considering applying TSMC’s 3-nanometer (nm) process to the HBM4E base die.

Industry consensus is that SK hynix’s growth momentum will continue at least through next year. With Samsung Electronics (about 300 trillion won) added in, the two domestic memory giants are expected to achieve a combined annual operating profit of 500 trillion won. Lee Jongwook, a researcher at Samsung Securities, analyzed, "Unlike in the past, this cycle is differentiated by the prospect that the period of boom could structurally last much longer," and added, "Reflecting the trend of increasing profit sustainability, operating profit is projected to continue rising to 232 trillion won in 2027."

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