Korea Investment & Securities on July 30 projected that the prices of high bandwidth memory (HBM) and DRAM will rise significantly in the second half of the year, raising its target price for SK Hynix from 3.8 million won to 4.7 million won, an increase of 23.7%. The firm maintained its 'buy' rating.
Analyst Chae Min-sook noted, "Although the second quarter operating profit fell short of market expectations, this was due to the timing of shipments for high-value products being pushed to the second half rather than a decline in demand. In the third quarter, we expect an improvement in performance as both DRAM price increases and the effects of HBM4 mass production will be reflected simultaneously."
SK Hynix reported second-quarter revenues of 79.3 trillion won and an operating profit of 60.5 trillion won, marking increases of 51% and 61%, respectively, from the previous quarter, and 257% and 557% year-on-year. Although the operating profit was 6.4% below the market consensus of 64.7 trillion won, the operating profit margin reached a record high of 76% for the quarter.
Analysts attributed the second-quarter results falling short of expectations to a lower-than-expected increase in the average selling price (ASP) of DRAM. However, they believe this is due to some shipment schedules being deferred to the second half, which could actually serve as a factor for improved performance in the third quarter.
Korea Investment & Securities forecasts that DRAM prices will rise by about 20% in the third quarter compared to the previous quarter, exceeding the previous estimate of 10%. Additionally, they expect that the expansion of shipments for 1c-nanometer (nm) process-based SoCAMM2 will lead to a higher-than-expected bit growth rate for DRAM this year.
Reflecting these factors, the estimates for operating profit for this year and next year have been raised by 10% and 11%, respectively, to 270 trillion won and 418 trillion won. With long-term supply contracts (LTA) supporting high memory prices, the mass production of HBM4 starting in the third quarter could lead to further price increases.
Chae added, "The recent stock price adjustment reflects market concerns about the sustainability of AI investments rather than changes in SK Hynix's fundamentals. As hyperscalers continue to invest in AI infrastructure, customers are requesting early shipments due to tight supply conditions."
She further noted, "Even with increased capital investment, the transition to production focused on HBM and advanced processes will limit the pace of supply expansion. The likelihood of a supply shortage intensifying in the second half of 2026 and into 2027 is high."
* This article has been translated by AI.
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