The upgrade reflects SK hynix's strong market position in high bandwidth memory (HBM) and expectations of improved financial performance.
S&P projects the company's annual earnings before interest, taxes, depreciation, and amortization (EBITDA) to reach 34 trillion to 38 trillion won ($25.8 billion to $28.8 billion) in 2024 to 2025, up from 5.5 trillion won ($4.2 billion) in 2023, with margins expanding to 56 percent from 17 percent.
SK hynix's leadership in the lucrative HBM market, essential for AI applications, was a key factor in the rating decision. The company's superior MR-MUF packaging technology gives it a competitive edge in production yield and cost efficiency.
Despite plans for increased capital expenditure to expand HBM production lines, S&P believes SK hynix will maintain prudent financial policies. The agency expects the company to reduce its debt-to-EBITDA ratio from 4.7 in 2023 to below 0.5 by the end of 2024.
While SK hynix is well-positioned in the memory market, potential risks include intensifying competition, particularly from Samsung Electronics in the HBM sector. However, S&P anticipates SK hynix will retain its market leadership for at least the next two years.
