Meet SK Hynix, the trillion-dollar chipmaker debuting on U.S. markets
An SK Hynix flag (R) and a South Korean national flag (L) fly in front of the company’s Bhundang office in Seongnam on January 26, 2024.
Jung Yeon-je | Afp | Getty Images
U.S. investors are finding a new way to benefit from the memory boom.
SK Hynix.com, South Korea’s second most valuable company after Samsung, is scheduled to begin trading on Nasdaq on Friday. The company’s launch, which coincides with major expansion plans into the US, follows a more than sevenfold increase in stock prices last year; It was a surge that pushed SK Hynix’s market value to nearly $1 trillion.
Many Americans don’t know the name SK Hynix, but they’re probably familiar with plenty of the company’s products. together with Micron and Samsung, SK Hynix is one of the three main manufacturers of computer memory used in laptops and phones sold by the following companies. Apple And Dell.
Memory has long occupied a sleepy corner of the semiconductor market. This has changed dramatically over the last few years as growing demand for AI has disrupted the industry, creating severe shortages of chips and pushing prices to all-time highs.
SK Hynix is a leader in high-performance memory used in AI chips. NvidiaThe most valuable company in the world. While memory components are generally relatively simple chips called RAM, which every computer needs to store data on, high-bandwidth memory (HBM) is more complex because it stacks many layers of traditional memory together. SK Hynix was the first to do so, and analysts predict that the company will capture more than half of the market this year.
in juneNvidia CEO Jensen Huang visited SK Hynix on a trip to Seoul after the two companies announced a multi-year partnership. Nvidia is the largest HBM buyer.
“This advantage has positioned SK Hynix as one of the biggest beneficiaries of the rapid growth in AI infrastructure,” said TrendForce analyst Ellie Wang.
SK Hynix will trade on Nasdaq under the symbol SKHY (originally SKHYV). The company plans to raise approximately $29 billion by issuing American depositary receipts (ADRs) to finance new plants and equipment. regulatory filing.
Some of this construction is taking place in the U.S. SK Hynix is building its first production facility in the country, scheduled for completion in 2028. The $4 billion facility in West Lafayette, Indiana, will be used for what is known as advanced packaging, a key part of the HBM manufacturing process that involves connecting and stacking individual chips into larger systems that can be used in a computer.
SK Hynix expects to receive up to $458 million in funding from the US CHIPS and Science Act passed in 2022 as a central part of its plan to develop the domestic chip industry. The company may also receive a loan of up to $570 million from the U.S. Department of Commerce.
It’s not just HBM that powers SK Hynix. The entire memory industry is experiencing rising prices due to the AI crisis; That means a shortage of traditional memory needed for phones, tablets, personal computers, cars, medical devices and other products. Profit margins are reaching record levels.
More than three-quarters of SK Hynix’s revenue comes from RAM, including HBM. The company also produces NAND flash, or hard drives, and is the market leader with a 19% share in the first quarter, according to IDC.
SK Hynix’s financials are as dazzling as its stock price. Annual revenue nearly tripled from 2023 to 2025, when sales reached nearly $65 billion. Analysts participating in the LSEG survey expect this figure to more than triple to approximately $235 billion by 2026.
History of rise and fall
The company’s path to the Nasdaq has not been steady and moving to the right.
SK Hynix was founded in 1983 as Hyundai Electronics, a subsidiary of Korean conglomerate Hyundai. It merged with LG Semicon in 1997 during the financial crisis, as memory prices dropped due to oversupply. Four years later, the company rebranded as Hynix Semiconductor and then became SK Hynix when SK Telecom acquired a majority stake in 2012.
As of March 31, “SK Square, which was spun off from SK Telecom in 2021, had a 20.5% stake in us,” according to SEC filings.
Betting on the memory boom has proven to be risky due to the cyclical nature of the business. Major technology shifts such as the dot-com craze, the growth of smartphones, or the shift from packaged software to the cloud have brought huge demand for memory to power new devices. This often results in an oversupply and subsequent decline in prices.
This concern is quite common today, given the rampant growth of artificial intelligence. However, the sector is trying to be prepared for future fluctuations.
SK Hynix, along with Micron and Samsung, enforces long-term contracts for memory, using their market power to fix prices and orders years into the future. In the past, memory companies typically sold their supplies on a quarterly or annual basis.
Companies of all sizes, including Giants like Apple are scrambling to secure memory.
“These deals often require customers to provide longer-term demand visibility,” said TrendForce’s Wang, allowing SK Hynix to plan its spending with more confidence.
Futurum Group analyst Daniel Newman said investors should weigh the risks of buying at these levels knowing what they know about the past.
“This is how memory always acts in any megaloop or superloop,” Newman said. “The problem is, it always crashes hard.”
However, Newman added that if AI demand remains high in the coming years, memory companies like SK Hynix will be a bargain. Industry experts say AI needs increasing amounts of memory to run without hitting the “memory wall,” and memory vendors say this shortage won’t ease until at least 2027.
SK Hynix is counting on it.
SK Hynix plans to spend up to $720 billion on expanding facilities to meet demand for memory for AI in South Korea, according to the company.
A cluster of chip manufacturing facilities in Yongin, just south of Seoul, will cost $390 billion. The company is accelerating the project’s timeline by more than a decade, with the four factories scheduled to be completed by 2033. Elsewhere in South Korea, SK Hynix is expanding its production facilities in Cheongju and developing a new factory cluster in the country’s southwestern region.
The factories require SK Hynix to devote large amounts of capital to key chipmaking equipment known as extreme ultraviolet lithography (EUV) machines, which are required to etch the advanced circuits needed to make and stack advanced chips like HBM. It’s hard to find, costs up to $400 million, and only ASML in the Netherlands. SK Hynix plans to spend approximately $7.8 billion on new EUV machines by the end of 2027, according to the company’s filing with the SEC.
“If you go to Korea, they’re building a lot of factories,” said Counterpoint research director MS Hwang. “But this takes time. The earliest they can bring manufactured wafers to market is the end of 2027.”
In the US, SK Hynix also has major expansion plans, as well as its Indiana project.
company in question In January, it said it had set aside $10 billion to invest in what it calls AI Company, an effort to come up with new product lines and support U.S. businesses.
The largest component of AI Company is Solidigm. This business produces NAND flash memory and was purchased from: Intel To $9 billion in 2021. It is currently headquartered in Rancho Cordova, California, near Sacramento, where it develops new products such as solid-state drives that can store more data.
Most of the action is still at home.
“Everyone is coming,” Hwang said, referring to companies flocking to South Korea to sign big contracts.
Hwang said there were rumors that nearby hotels were “fully booked” as cloud companies and chip makers were “lining up to sign a long-term contract.”
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