---
endpoint: analytics
pattern: Technology
status: done
latency_ms: 366038
conversation_id: ad2f22b7-12f9-4dd4-8774-dec77666fce6
citations: 19
created: 2026-05-31 19:13:50Z
---

# Provide a one‑year narrative of SK Hynix, outlining how business performance, market conditions, and company actions shaped investor sentiment and valuation.

# SK Hynix: One‑Year Narrative (May 2025 – May 2026)

## Executive Arc

Over the last twelve months SK Hynix transitioned from a **"cautiously optimistic AI memory leader"** trading on tightening DRAM supply and an HBM monopoly thesis, into the **single biggest beneficiary of the global AI super‑cycle** — culminating in record quarterly profitability, a maiden US ADR filing, and a multi‑hundred‑percent re‑rating as the Kospi crossed the 7,000 milestone for the first time. The narrative moved through three discrete phases:

1. **May–June 2025 — Quiet conviction:** HBM3E leadership intact, capex still framed defensively, political relief from the Korean election.
2. **July 2025 – January 2026 — Earnings acceleration:** Three consecutive record quarters and the management label "super‑boom cycle."
3. **February – May 2026 — Re‑rating phase:** Capex ramp, AI subsidiary, ADR offering, KRW 100tn net‑cash target, and the share price clearing KRW 1.4M with a first memory profit‑taking wobble at quarter‑end.

---

## Phase 1 — Setting the Stage (May–June 2025)

**Business posture.** Entering the period, SK Hynix's narrative was one of disciplined optimism: management's virtual NDR (May 2025) flagged that **80% of 2026 HBM supply was being negotiated in 1H25**, with HBM revenue share of DRAM "approaching 50%, anticipated to stabilise at 55%–60% in future years" — yet capex was still being framed cautiously due to uncertainties over hyperscaler capex, tariffs and consumer demand [20]. Customer inventories had been declining since end‑4Q24, giving Hynix shipment flexibility into late 2H25 [21]. The 2025 capex plan was earmarked mainly for **M15X (opening 4Q25) and the Yongin Phase 1 fab (completion 2Q27)**, with the remainder for incremental HBM capacity, 1a‑nm migration at Wuxi DRAM and NAND tech transition [22].

**HBM customer concentration & technology cliff.** CLSA's sector note flagged that **Nvidia represented ~70% of Hynix's 2026 HBM supply**, with the balance being negotiated with ASIC customers, and that Hynix would also benefit from Korea's planned **₩100tn sovereign AI / data‑centre investment** [25]. The HBM4 transition was scheduled for **4Q25 mass production with an expected ~30% ASP premium over HBM3E**, set to drive blended ASP and profitability into 2026 [23]. CLSA's 2Q preview already modeled OP at ₩9.0tn (+21% QoQ), aided by a 30% QoQ DDR4 price spike [24].

**Supply chain and geopolitics.**
- **Hanmi Semiconductor — TCB irreplaceability:** Mid‑May TCB orders to Hanmi (~₩42bn) were read as confirmation that Hynix could not produce HBM without Hanmi's TCB tools, dispelling fears of full vendor displacement [28].
- **China fab tail risk:** On 20 June, WSJ reported the US Department of Commerce was weighing revocation of the indefinite waivers allowing US equipment makers to supply Hynix's (and Samsung's) China memory fabs. Short term: potential additional DRAM supply tightening; mid‑term: accelerated fab relocation back to Korea [27].

**Political backdrop.** The **3 June election of Jaemyung Lee and the DPK** ended the post‑December political vacuum and crystallised expectations for commercial code reform, equity‑friendly fiscal policy and a Kospi rerating off a depressed 0.84x PB [29]. Hynix, as the highest‑beta AI memory proxy in the Kospi, was a structural beneficiary of the Korean equity rerating thesis.

**Sentiment snapshot — Sell‑side conviction crystallises (late June 2025).** Micron's blowout FY3Q print and bullish 2H25 DRAM/eSSD commentary forced through SK Hynix target‑price upgrades — CLSA lifted from **₩290,000 to ₩350,000**, rolling its valuation anchor forward to 2H26 [26]. This was the first quantitative re‑rating wave; the share was still consensus‑debated on cycle peak risk.

---

## Phase 2 — Earnings Acceleration (Jul 2025 – Jan 2026)

### Q2 2025 (reported late‑Jul 2025) — First record post‑election

- **Operating profit KRW 9.2tn, +24% QoQ / +68% YoY, 41% margin — a new quarterly record** [1].
- Driven by HBM3E 12‑Hi ramping to full scale and unexpectedly strong DRAM bit shipments (~mid‑20% QoQ) from PC/server demand. NAND shipments rose >70% QoQ off a low base [1].
- DDR4 prices spiked on legacy production cuts by competitors; Hynix is phasing out DDR4 for the mass market while continuing supply for selected long‑term customers.

### Q3 2025 (reported 28 October 2025) — The "Super Boom" inflection

- **First time SK Hynix crosses KRW 10tn quarterly OP: KRW 11.4tn, +24% QoQ / +62% YoY, 47% margin** [2].
- **Net income KRW 12.6tn, 52% net margin — another record** [11].
- DRAM ASP rose mid‑single‑digit QoQ; >128GB DDR5 module shipments doubled QoQ for two consecutive quarters; enterprise SSD shipments grew double‑digit on AI server demand [2].
- CFO Kim Woohyun explicitly framed the cycle as a **"super‑boom cycle... different from the super cycles that we witnessed in 2017 and 2018,"** with AI demand additive to existing applications rather than substituting them [7].
- Strategic announcement: **HBM4 shipments to start 4Q25**, with 1c‑nm DDR5 mass production already underway and 321‑Layer NAND being deployed.

### Q4 2025 (reported 28 January 2026) — Year‑end record

- **Operating profit KRW 19.2tn, +68% QoQ / +137% YoY, 58% operating margin (EBITDA margin 69%)** [3].
- DRAM ASP +mid‑20s% QoQ; NAND ASP +low 30s% QoQ as supply could not keep up with AI infrastructure spending [3].
- **Full‑year 2025: revenue KRW 97.1tn (+47%), operating profit KRW 47.2tn (+101%)** — both annual records; HBM revenue more than doubled YoY [4].
- **Capital return inflection.** Board approved an additional ₩1,500/share dividend, taking 2025 DPS to **₩3,000 (total ~₩2.1tn payout)**, plus **retirement of all 50 million remaining treasury shares (~2.1% of total shares)** — a decisive shift from "financial soundness first" toward simultaneous balance‑sheet and shareholder‑return optimisation [10].

### Key strategic pivot — late January

- **HBM4 mass production readiness** was reportedly achieved in September 2025 (a "world first"), preserving Hynix's lead even as Samsung was reported to be preparing HBM4 mass production for February 2026 [19] — narrowing but not closing the technology gap.
- Capex 2026 was telegraphed to **increase significantly** YoY (Yongin Cluster preparation, M15X ramp, EUV procurement), but kept within "mid‑30%" capex‑to‑revenue discipline.

---

## Phase 3 — Re‑Rating Phase (Feb – May 2026)

### Q1 2026 (reported 22 April 2026) — Outright blow‑out

- **Revenue KRW 52.6tn, +60% QoQ / +198% YoY — crossing the KRW 50tn quarterly threshold for the first time ever** [5].
- **Operating profit KRW 37.6tn, +13ppt margin expansion to 72%; EBITDA margin 79%; net profit KRW 40.3tn (77% net margin)** [6].
- **Balance sheet:** cash & ST investments KRW 54.3tn, interest‑bearing debt down to KRW 19.3tn, **net cash of KRW 35tn**.
- NAND ASP rose **mid‑70% QoQ** as supply tightened and the mix shifted to high‑value‑added eSSD; DRAM continued benefiting from concurrent HBM, conventional DRAM and DDR5 tightness.

### Strategic actions in the quarter

- **AI Co. subsidiary established in the US** — investment commitment "not large relative to financial performance"; designed to position Hynix as a partner in the AI data‑centre ecosystem rather than just a chip vendor.
- **Multi‑year Long‑Term Agreements (LTAs):** Hynix disclosed that customers are now pushing for medium‑to‑long‑term supply contracts because memory price/supply uncertainty has become a key business risk for them. Hynix uses LTAs to lock in demand visibility and de‑risk capex.
- **ADR offering.** On **24 March 2026**, Hynix **confidentially submitted a registration statement to the SEC for an ADR offering**, targeting a US listing within 2026 [9]. IFR subsequently reported the ADR could **list as early as July 2026** — a structural shift in the investor base and a marker of management's confidence in the AI cycle's durability [12].
- **KRW 100tn net cash target.** Management linked the ADR and capital return policies to a multi‑year ambition of building **net cash >KRW 100tn** — to immunise capex from cycle risk and "respond promptly to customer demand."

### Macro & sector context (Feb–May 2026)

- **Samsung began HBM4 mass production in late February 2026** — competitive pressure that, paradoxically, *reinforced* Hynix's premium, because customer qualification preference and HBM4 ramp execution still favoured the incumbent [19].
- **April Korean ICT exports rose +125.9% y/y to $42.7bn** — the macro confirmation of the AI‑memory boom at the country level [17].
- **DigiTimes (14 May 2026)** characterised Hynix and Samsung as engaged in an **"unprecedented race to expand capacity"** to meet AI demand [13].
- **Sell‑side capitulation:** China Renaissance upgraded Hynix from Hold to Buy on **5 May 2026 at a reference price of KRW 1,447,000** [16], reflecting that the share price had run ahead of even bullish 2025 targets (CLSA's June 2025 TP of ₩350k was now <25% of the prevailing share price).

### Valuation & sentiment crescendo

- **4 May 2026:** "AI trade propels South Korea and Taiwan benchmarks to record high" — Kospi and Taiex simultaneously printed new highs, with Hynix as the marquee Korean name [14].
- **6 May 2026:** Samsung Electronics' market cap eclipsed **USD 1 trillion** as the **Kospi sailed past 7,000** — a milestone Korean valuations had not approached even at prior super‑cycle peaks [15].
- **11 May 2026:** "South Korean equity rally maintains pace as strategists upgrade Kospi targets" — buy‑side conviction migrated from cyclical trade to structural re‑rating.
- **15 May 2026 — first crack:** APAC morning themes flagged a **"Memory pullback"** even as broader Asia AI earnings remained strong [18] — the earliest signal investors are starting to debate cycle peak vs. structural plateau.

---

## How Each Driver Shaped Sentiment & Valuation

| Period | Business performance | Market conditions | Company action | Sentiment / valuation impact |
|---|---|---|---|---|
| **May–Jun 2025** | HBM3E 12‑Hi ramp; cautious capex [20] | Korean political vacuum closed by Lee/DPK win [29]; WSJ China‑fab waiver threat [27] | Hanmi TCB orders restored [28]; HBM4 4Q25 prep [23] | First TP wave: CLSA ₩290k → ₩350k [26] |
| **Q2 2025 (Jul)** | Record OP ₩9.2tn, 41% margin [1] | AI capex from hyperscalers persisting; DDR4 price spike | Phasing out mass‑market DDR4; capex still disciplined | Confirmation of cycle thesis, not yet peak‑euphoria |
| **Q3 2025 (Oct)** | **First >₩10tn quarter**: OP ₩11.4tn; NI ₩12.6tn / 52% margin [2][11] | "Super‑boom" labelled by CFO [7] | HBM4 4Q25 ship start; 1c‑nm DDR5 ramp | Decisive narrative shift: AI = structural, not cyclical |
| **Q4 2025 (Jan)** | OP ₩19.2tn / 58% margin; FY revenue ₩97.1tn (+47%) / OP ₩47.2tn (+101%) [3][4] | Industry supply growth lagging demand across DRAM/NAND | ₩3,000 DPS + retirement of 50m treasury shares [10] | Capital‑return re‑pricing; Hynix becomes a "growth + return" name |
| **Feb 2026** | HBM4 leadership defended vs Samsung's Feb mass production [19] | "AI disruption fears enhance appeal of Asian tech hardware" | Net cash position, KRW 100tn cash goal communicated | Premium widens vs Samsung |
| **Q1 2026 (Apr)** | OP ₩37.6tn / **72% margin**; revenue ₩52.6tn (+198% YoY) [5][6] | Korean ICT exports +125.9% y/y [17]; capacity race [13] | **ADR S‑1 filing (24 Mar)** [9]; AI Co. set up in US | Investor universe expansion priced in |
| **May 2026** | Continuing record momentum | Kospi >7,000; Samsung mcap >$1T [15]; AI trade printing record highs [14] | ADR listing targeted for July 2026 [12] | Late‑cycle upgrades (China Renaissance to Buy @ ₩1.447M [16]); first profit‑taking wobble 15 May [18] |

---

## Synthesis: What Re‑Rated Hynix

1. **Earnings power proven, not promised.** The progression — ₩9.2tn → ₩11.4tn → ₩19.2tn → **₩37.6tn** in four consecutive quarters of operating profit, with margin expanding from 41% to **72%** — converted the "AI memory leader" narrative from a forward thesis into a realised cash machine [1][2][3][6]. The 2017–18 super‑cycle comparison was explicitly rejected by management because AI demand is **additive across product lines** (HBM + server DDR5 + eSSD) rather than concentrated in conventional DRAM [7].
2. **Capital structure became an asset, not a constraint.** From ~25% net debt‑to‑equity in mid‑2025 to **KRW 35tn net cash by 1Q26**, with a stated trajectory toward KRW 100tn — enabling simultaneous capex acceleration (Yongin, M15X, EUV) **and** an inflection in shareholder returns (dividend hike + 50m‑share retirement) [10].
3. **The Korean equity backdrop turned into a structural tailwind.** Commercial code reform, Lee/DPK fiscal expansion, foreign and retail inflows, and ultimately **Kospi >7,000 with Samsung at $1T market cap** [15] re‑set the multiple on Korean equities globally — Hynix, as the highest‑beta AI proxy, was the principal vehicle.
4. **Globalisation of the shareholder base.** The **ADR filing** [9][12] and **US AI Co. subsidiary** are structural moves to access deeper liquidity pools, mirror customer geography, and arguably defend the multiple as the cycle eventually normalises.
5. **The risks are now mostly on the upside being too well‑known.** The first signs that consensus is satiated appeared on 15 May 2026 ("Memory pullback") [18]; Samsung HBM4 mass production [19] and ongoing China‑fab geopolitical noise [27] remain the live debate points. None has yet broken the thesis, but they have shifted the question from *"How high can earnings go?"* to *"How long will they stay there?"*

---

**Sources**
[1] SK hynix Q2 2025 Earnings Call
[2] SK hynix Q3 2025 Earnings Call (28-October-2025)
[3] SK hynix Q4 2025 Earnings Call (28-January-2026)
[4] SK hynix Q4 2025 Earnings Call — Full Year 2025 figures
[5] SK hynix Q1 2026 Earnings Call (22-April-2026) — Revenue
[6] SK hynix Q1 2026 Earnings Call — Operating profit / margins
[7] SK hynix Q3 2025 Earnings Call — CFO super-boom commentary
[8] SK hynix Q2 2025 Earnings Call — China GPU export resumption
[9] SK hynix Q1 2026 Earnings Call — ADR registration disclosure
[10] SK hynix Q4 2025 Earnings Call — Capital return / treasury share retirement
[11] SK hynix Q3 2025 Earnings Call — Net income / cash
[12] SK Hynix's ADR listing to take place as early as July — StreetAccount/IFR (30-Apr-2026)
[13] AI boom has Samsung Electronics, SK Hynix in unprecedented race to expand capacity — DigiTimes via StreetAccount (14-May-2026)
[14] AI trade propels South Korea and Taiwan benchmarks to record high — StreetAccount (4-May-2026)
[15] Samsung market cap eclipses $1T as Kospi sails past 7K — StreetAccount (6-May-2026)
[16] SK Hynix upgraded to buy from hold at China Renaissance (KRW 1,447,000) — StreetAccount (5-May-2026)
[17] South Korea reports April ICT exports $42.71B, +125.9% y/y — StreetAccount (14-May-2026)
[18] APAC morning themes include Memory pullback — StreetAccount (15-May-2026)
[19] Samsung Electronics reportedly to begin mass production of HBM4 chips later in February — Yonhap via StreetAccount (9-Feb-2026)
[20] SK Hynix — Takeaways from virtual NDR — CLSA (13-May-2025) — 607959246LinqAlpha.PDF
[21] SK Hynix — Near-term demand outlook & declining inventory — CLSA (13-May-2025) — 607959246LinqAlpha.PDF
[22] SK Hynix — Conservative capex stance & 2H25 supply growth — CLSA (13-May-2025) — 607959246LinqAlpha.PDF
[23] SK Hynix — Expecting another strong quarter (HBM4 c.30% ASP premium) — CLSA (19-Jun-2025) — 607962387LinqAlpha.PDF
[24] SK Hynix — 2Q preview: DRAM shipments & DDR4 boost — CLSA (19-Jun-2025) — 607962387LinqAlpha.PDF
[25] SK Hynix — 2026 HBM supply negotiations & Korea AI spending — CLSA (19-Jun-2025) — 607962387LinqAlpha.PDF
[26] Korea Memory sector outlook — Micron read-across; TP raise ₩290k→₩350k — CLSA (25-Jun-2025) — 607962817LinqAlpha.PDF
[27] Korea Memory sector outlook — Potential restrictions on China fabs — CLSA (22-Jun-2025) — 607962512LinqAlpha.PDF
[28] Hanmi Semiconductor — Irreplaceable (TCB position for HBM) — CLSA (18-May-2025) — 607959765LinqAlpha.PDF
[29] Korea strategy — Jaemyung Lee, the 21st president — CLSA (3-Jun-2025) — 607961173LinqAlpha.PDF

## Citations

- [1] **Q2 2025 SK hynix Inc.** · external
- [2] **SK hynix, Inc., Q3 2025 Earnings Call, 28-October-2025 8** · external
- [3] **SK hynix, Inc., Q4 2025 Earnings Call, 28-January-2026 7** · external
- [4] **SK hynix, Inc., Q4 2025 Earnings Call, 28-January-2026 7** · external
- [5] **SK hynix, Inc., Q1 2026 Earnings Call, 22-April-2026 8** · external
- [6] **SK hynix, Inc., Q1 2026 Earnings Call, 22-April-2026 8** · external
- [7] **SK hynix, Inc., Q3 2025 Earnings Call, 28-October-2025 8** · external
- [8] **Q2 2025 SK hynix Inc.** · external
- [9] **SK hynix, Inc., Q1 2026 Earnings Call, 22-April-2026 8** · external
- [10] **SK hynix, Inc., Q4 2025 Earnings Call, 28-January-2026 7** · external
- [11] **SK hynix, Inc., Q3 2025 Earnings Call, 28-October-2025 8** · external
- [12] **SK Hynix's ADR listing to take place as early as July - IFR** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4650247&_doc_date=2026-04-30&_doc_product=SA>
- [13] **AI boom has Samsung Electronics, SK Hynix in unprecedented race to expand capacity - DigiTimes** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4679987&_doc_date=2026-05-14&_doc_product=SA>
- [14] **AI trade propels South Korea and Taiwan benchmarks to record high** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4655178&_doc_date=2026-05-04&_doc_product=SA>
- [15] **Samsung market cap eclipses $1T as Kospi sails past 7K** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4660406&_doc_date=2026-05-06&_doc_product=SA>
- [16] **SK Hynix upgraded to buy from hold at China Renaissance (HK)** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4656792&_doc_date=2026-05-05&_doc_product=SA>
- [17] **South Korea reports April ICT exports $42.71B, +125.9% y/y** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4679433&_doc_date=2026-05-14&_doc_product=SA>
- [18] **APAC morning themes include Memory pullback; strong Asia AI earnings continue** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4682148&_doc_date=2026-05-15&_doc_product=SA>
- [19] **Samsung Electronics reportedly to begin mass production of HBM4 chips later in February - Yonhap** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4549553&_doc_date=2026-02-09&_doc_product=SA>

