Major Bank Rating | CLSA: SK Hynix's share price has fully reflected multiple concerns, maintains "High Conviction Outperform" rating

Golden Ten Data July 29 ｜ Lyon issued a report indicating that due to market concerns about the sustainability of AI capital expenditure, memory prices peaking and falling, as well as the rise of Chinese suppliers, SK Hynix's share price has dropped 50% from its peak. The institution maintains its original outlook: due to the complexity of advanced process nodes, the lengthy ramp-up time for new plants, and the continued strong demand from data centers, memory supply is expected to remain tight until 2027. AI capability has become the core of competitiveness for hyperscale cloud vendors, and as AI models grow increasingly complex, demand for high-end memory products should continue to increase. The institution pointed out that the main concerns are fully reflected in the stock price, maintaining its “high conviction to outperform the market” rating for SK Hynix.

The report notes SK Hynix's second-quarter revenue reached 79.32 trillion won, up 51% quarter-on-quarter; operating profit was 60.54 trillion won, up 61% quarter-on-quarter, both 6% and 7% below market consensus, respectively. The average selling prices for DRAM and NAND increased by 30% and 56%, respectively. The main reason for earnings falling short of expectations is a weaker product mix, including a higher proportion of HBM3E with stable average quarterly pricing, and delayed shipments of high-priced HBM4 to Nvidia. Based on ongoing discussions with key clients, Hynix emphasized that AI infrastructure investment will remain strong even after 2027. As AI applications expand to search, programming, and agent-type AI, demand for high-end products such as HBM, server DRAM, and high-capacity eSSD is expected to continue growing. Shipments of HBM4 have already started in the second quarter and are expected to accelerate in the second half of the year.