At JPMorgan's Korea Conference, SK Hynix: Memory Upcycle Expected to Last Longer Than Anticipated

According to Chasing Wind Trading Desk, on March 8, 2026, J.P. Morgan released a research report documenting the key statements of SK hynix management at the J.P. Morgan Korea Conference. J.P. Morgan maintained an Overweight rating on SK hynix, with a target price of 1.25 million KRW, implying approximately 35% upside from the current share price (926,000 KRW).

For investors, this conference conveyed several key signals:

• The duration of the memory upcycle will exceed market expectations, as the supply-demand gap is severe on both the DRAM and NAND sides;

• The HBM business maintains a strong leading position, the HBM4 mass production schedule remains unchanged, and profitability targets are maintained at the same level as last year;

• Leading manufacturers are shifting strategic focus to "fab-first", with about 22 trillion KRW infrastructure capital expenditure plan underscoring their determination for long-term expansion;

• Increased shareholder returns, as the company announced in January 2026 a special dividend of 1 trillion KRW and a treasury share cancellation plan, sending a positive signal.

The upcycle duration will exceed expectations

SK hynix management systematically presented at the conference multiple drivers supporting a longer-than-expected memory upcycle:

1. The rise of customized memory solutions: Custom products such as HBM (High Bandwidth Memory) are reshaping the memory market landscape;

2. Changes in wafer and supply economics brought by HBM: Due to the concept of "wafer-to-die penalty", HBM consumes a larger share of production capacity;

3. Expansion of AI inference demand into traditional DRAM/NAND: The expanding application scenarios of AI are shifting memory demand from high-end HBM to regular DRAM and NAND.

On the supply-demand level, management clearly stated that both DRAM and NAND are facing severe supply-demand gaps, and the upward price trend is expected to continue for the foreseeable future. Currently, both suppliers and channel customers have inventories below average levels, with bit shipment growth and bit production growth basically in balance.

Investors are highly focused on LTAs and cycle sustainability

At this conference, investors showed great interest in long-term supply agreements (LTAs) and cycle sustainability. Management characterized the current memory industry as a business model transition phase, with sustaining the memory upcycle as their top strategic priority.

Regarding the LTA framework, management emphasized:

• More binding bilateral agreements are key to improving the visibility of revenue and cash flow;

• Key considerations include locking in supply volume and price range to ensure the predictability of supply contracts;

• LTAs are typically multi-year agreements (over three years);

• J.P. Morgan believes SK hynix is adopting a more balanced LTA strategy, seeking balance between B2B and B2C client structure while maintaining a relatively conservative pricing strategy.

HBM leadership is solid, with more aggressive capital returns

SK hynix reiterated its overall HBM business plan for this year, with the HBM4 mass production ramp schedule remaining unchanged (J.P. Morgan expects HBM4 bit shipments to cross over in Q3 2026).

The company expressed strong confidence in maintaining HBM business leadership, mainly relying on: deep collaboration with ecosystem partners, including working with a leading wafer foundry on logic chip design and manufacturing; and clear visibility of its technology roadmap.

On pricing, SK hynix reiterated that both HBM bit shipment volume and pricing are negotiated annually, aiming to maintain a similar profitability level as last year. Although D5/LPD5 prices have rebounded significantly since Q4 2025, the company believes there is almost no possibility of contract renegotiation for 2026 volumes.

In addition, SK hynix has shown a more aggressive stance on shareholder returns. After establishing the primary target of net cash position, the company maintained flexibility to distribute additional shareholder returns in advance. This undoubtedly sends a strong positive signal — the management team is highly confident in the strength and length of the current memory cycle, with clearer cash flow visibility than in previous cycles.

DRAM capacity planning: Fab-first strategy, Yong-in base advancing in phases

SK hynix further disclosed the strategic logic behind its approximately 22 trillion KRW infrastructure capital expenditure plan, with the core being a "fab-first" strategy.

The specific plans are as follows:

• Yong-in Fab 1 Phase 1 mass production schedule has been advanced by three months, with the company focusing on infrastructure construction and cleanroom facilities to ensure flexibility in capacity expansion;

• The remaining Phases 2 to 6 of Yong-in Fab 1 will be made available in stages between 2028 and 2030;

• Management revealed that the designed capacity of Yong-in Fab is higher than J.P. Morgan’s previous estimate of 270,000 to 350,000 wafers per month (WSPM), and the actual construction scale may vary depending on the design of the memory building and the 1dnm process deployment timetable.

 

~~~~~~~~~~~~~~~~~~~~~~~~