Over the past 12 months, SK Hynix's market capitalization has surged by 340%, transforming from a 'zombie company' under creditor control to a key player setting prices in the AI supply chain. Leveraging its first-mover advantage in High Bandwidth Memory (HBM), SK Hynix has formed deep partnerships with NVIDIA and Microsoft amid the surge in AI demand, capturing over half of the global HBM market share. Its market share has surpassed Samsung’s, and its profit margin exceeds that of Taiwan Semiconductor.
SK Hynix, leveraging its first-mover advantage in high-bandwidth memory (HBM), has transformed from a once 'zombie company' follower into a key pricing power within the AI supply chain amid the expansion of AI servers and a shortage of memory chips. It has surpassed traditional industry leaders in both profitability and capital market performance.
The latest earnings report underscores this transformation. According to the Financial Times, SK Hynix's revenue in the fourth quarter increased by 66% year-on-year, with an operating profit margin of 58%, surpassing Taiwan Semiconductor, the world’s largest contract chipmaker. Over the past 12 months, the company’s market value surged by approximately 340%, reaching 640 trillion Korean won.
The shift in supply and demand dynamics has been the core driver. The phased shortages of HBM, DRAM, and NAND have driven up prices, directly benefiting SK Hynix as the leading player in HBM. Its profit margins have expanded rapidly, prompting the market to raise its 'leverage coefficient' within the AI cycle.
More critically, customer alignment has played a role. SK Hynix has captured over half of the global HBM market share and is NVIDIA's primary HBM supplier. Recently, it was also selected by Microsoft as a supplier for its self-developed AI chips.
Under the leadership of SK Group Chairman Chey Tae-won, who proposed AI as the 'fourth quantum leap,' the company plans to invest 10 billion USD to reposition itself from being a 'chip maker' to an 'AI solutions provider.' However, competitive pressures, customer negotiations, and geopolitical risks are simultaneously increasing uncertainties.
Long-Term Commitment to HBM: Research and Development Priority and a Resilient Organizational Culture
SK Hynix’s turning point did not happen overnight. Established in 1983 under the Hyundai Group conglomerate, it survived as a creditor-controlled 'zombie' enterprise following the Asian financial crisis from 1997 to 1998 and the oversupply of DRAM in the early 2000s. In 2002, Micron offered a 3.2-billion-USD acquisition proposal but refused to assume 6 billion USD in debt, causing the deal to collapse.
It wasn’t until 2011, when SK Group acquired the company for 3.4 trillion Korean won, that the so-called 'Curse of Hynix' came to an end. Subsequently, Chey Tae-won appointed senior engineer Park Sung-wook as CEO, who promoted a strategy prioritizing long-term R&D over short-term financial goals. Under his leadership, the company continued to invest in HBM even before it gained widespread recognition.
Between 2010 and 2024, the company’s annual R&D spending grew by an average of 14%. As Chris Miller noted in his book, it was not until ChatGPT triggered a surge in AI server demand that SK Hynix’s multi-year commitment truly paid off.
The shortage of HBM and the AI boom have pushed price ceilings and profit margins to new heights.
The value of HBM lies in providing high-speed data throughput for AI training and inference, becoming a key bottleneck for AI servers. As demand surges, shortages on the storage side have begun to dominate industry profit distribution, with SK Hynix's high profit margins being a result of this structural 'squeeze effect'.
According to an HSBC research report, the HBM market size grew from USD 1 billion in 2022 to USD 16 billion in 2024, and is expected to reach USD 87 billion by 2027.
Professor Kwon Seok-joon of Sunkyunkwan University believes that storage constraints may persist until the fourth quarter of 2027, stating, 'Forward-looking capacity has been pre-secured, and everyone agrees that storage is the current bottleneck.'
In this cycle, SK Hynix’s revenue has increased from KRW 44.6 trillion to KRW 97.1 trillion over the past three years, indicating that its benefits have extended from 'price increases' to 'market share growth'.
The key battle to surpass Samsung: Over half of the market share tied to NVIDIA and Microsoft
In the field of HBM, a core component for AI, SK Hynix has 'outperformed' long-term rivals, $Samsung Electronics Co., Ltd. (SSNLF.US)$ including more renowned chipmakers, capturing over half of the global HBM market and becoming $NVIDIA (NVDA.US)$ a primary supplier. Kwon commented that SK Hynix was once a 'follower' but is now becoming an industry 'shaper.'
The value of the customer base is also increasing. In addition to NVIDIA, the company has 'recently been selected by $Microsoft (MSFT.US)$ ,' entering its self-developed AI chip supply chain. Such orders not only signify current shipments but, more importantly, establish an early-mover advantage in defining next-generation products, customization capabilities, and yield requirements.
From chips to 'AI solutions company,' a USD 10 billion capital expenditure bet on the next phase
During the HBM boom, SK Hynix has chosen to double down on AI. The company plans to invest USD 10 billion in capital to shift its business focus from merely manufacturing chips to becoming an 'AI solutions company.' Chey Tae-won stated that AI will become SK Group’s 'fourth quantum leap.'
The expansion is not limited to the chip end. Last summer, SK affiliates, including SK Hynix, launched Korea’s largest AI data center project in Ulsan, with a scale of approximately KRW 7 trillion. At the event, Chey Tae-won stated that the company would build 'the most efficient AI infrastructure' through a combination of 'semiconductors, power, and energy solutions.'
The 'New Worship' and Capital Migration: SK Hynix Becomes the New Goal for South Korean Youth
Changes in industrial status are also reflected at the societal level. According to a report by the Financial Times, a survey targeting young job seekers showed that SK Hynix has replaced Samsung as South Korea's most favored employer. Lim Hee-jin, a student at Seoul National University, stated that it has "high future potential," and she would feel envious if her friends were hired there.
For investors, this trend of 'talent and capital concentration in AI memory' signifies that SK Hynix's competitive edge stems not only from a cyclical upturn but also from its position in HBM supply, customer certification, and technological iteration. The real test lies in whether the company can transform its current excess profits into product and ecosystem control when HBM transitions from scarcity to normalcy, and when customers demand more while competitors close in.
Editor/Doris
