SK Hynix shares recovered on Tuesday, climbing roughly 1.9% to 1.706 million won in Seoul trading, as South Korean chip stocks bounced from earlier losses. The rebound follows a steep 9% decline over the past month, during which foreign investors offloaded about 5.98 trillion won of the company's shares.
The recent weakness appears counterintuitive given the strength in memory prices. HBM export prices have hit a record $76.13 per unit, while conventional DRAM export prices surged 24.3% in July. However, the market's focus is shifting from overall demand to who captures the profits in the next-generation HBM4 cycle.
Samsung emerges as a stronger HBM4 contender
SK Hynix built its leadership by being an early mover in HBM and a key supplier for AI accelerators. But Samsung Electronics is now making faster progress with HBM4, offering customers a credible second source. According to LS Securities, HBM4's share of Samsung's HBM shipments jumped from about 5% in the first quarter to roughly 35% in the second, while its blended HBM yield improved by more than five percentage points.
Jung Woo-sung, an analyst at LS Securities, told Seoul Economic Daily that this shift "does not mean growth in the HBM market is slowing." Instead, he described it as a "normalisation of competition" among suppliers. Large tech customers typically prefer having multiple qualified suppliers to reduce supply risk and strengthen their negotiating position.
If Samsung can deliver HBM4 reliably at scale, SK Hynix may still see strong shipment growth, but it could lose some of the pricing power that came with limited alternatives. This dynamic is already influencing analyst expectations.
Margin outlook dims more than demand
LS Securities cut its SK Hynix target price by 27.3% to 2.4 million won from 3.3 million won, while maintaining a buy rating. More notably, it lowered its forecast for HBM operating margins next year to about 60% from roughly 80%. The brokerage noted that HBM accounts for more than twice as much of SK Hynix's intrinsic value as it does for Samsung, making even modest changes in HBM profitability more significant for SK Hynix's valuation.
LS Securities also sees limits to further aggressive memory price increases. Supply should remain tight, but rising memory costs are taking a larger share of Big Tech server spending, which could temper future price hikes.
AI memory demand remains robust
The broader industry backdrop remains supportive. Bank of America believes global DRAM revenue growth could exceed 80% in 2027 if AI demand keeps expanding while manufacturers remain disciplined on conventional memory capacity. UBS forecasts that SK Hynix will retain the largest share of HBM bit shipments this year at about 48%, but expects Samsung to move ahead next year with roughly 41%, versus 39% for SK Hynix.
That would represent a more balanced competitive market, not the end of the AI memory boom. As Nvidia flags a memory crunch through 2028, the long-term demand picture remains intact. However, investors are increasingly weighing the margin implications of a two-horse race.
Recent market moves also reflect broader sentiment. The Kospi rebounded 6% as inflows into Korean equities surged, with Samsung and SK Hynix leading the charge. Yet, the memory sector jitters from earlier this month, partly tied to Apple's talks with CXMT, show how sensitive the market remains to competitive shifts.
For now, SK Hynix's core AI memory business stays strong, but the premium it once commanded is narrowing. Investors will be watching whether Samsung's HBM4 ramp-up erodes SK Hynix's pricing power more than expected.
This article is for informational purposes only and does not constitute financial advice.
