[Click eStock] "SK Hynix, Positive Average Selling Price in Q2"

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Shinhan Investment Corp. on the 5th expected that SKHynix (000660)" Hynix's average selling price (ASP) would be positive despite concerns, due to the effect of high-capacity DDR5 sales amid an aggressive sales stance in the second quarter. Accordingly, it maintained a 'Buy' investment rating and raised the target price to 135,000 KRW.

Go Young-min, a researcher at SKHynix (000660)" Hynix, stated, "Second-quarter sales are expected to increase by 15% from the previous quarter to 5.8 trillion KRW, with an operating loss of 3 trillion KRW, continuing the deficit." This level exceeds the operating loss consensus (-3.2 trillion KRW).

Unlike the sluggish DDR4 demand, DDR5 is playing a role in accelerating the transition demand of client companies to DDR5, driven by AI. Differentiated demand is being confirmed mainly for high-capacity 128GB products required for AI servers.

Researcher Go analyzed, "DDR5 penetration rate is highly likely to increase sharply during this economic recovery phase (second half of 2023 to first half of 2024)," and "It is expected to rise from 1% in the fourth quarter of 2022 to 40% in the first quarter of 2024."

The 128GB product is currently produced only by SKHynix (000660)" Hynix. The most stable yield based on 1anm is confirmed for 32GB and 64GB as well, and preparations for the next-generation 1b nm are also ahead. Researcher Go's diagnosis is that the company can maintain a clear number one position in the DDR5 market share until 2024.

AI applications are expanding beyond ChatBots to AR/VR, autonomous driving, fintech, healthcare, and more. HBM3 is currently the only product mass-produced globally and is exclusively supplied to Nvidia H100.

Researcher Go evaluated, "Sales growth of +45% in 2023 and +40% in 2024 is expected," and "A sharp increase in profits is anticipated during the industry rebound phase." He added, "There is still room for further upward revision in 2024. It is important to note that the stock price burden may be short-term."

In this regard, the second-quarter ASP, which will be the first to visually confirm the DDR5 effect, is important. He said, "The reason investors feel burdened after the rapid stock price rise along with AI prominence is due to concerns about the growth potential and speed of HBM," but "However, even excluding HBM in the 2024 upcycle, there is a high possibility of upward revision of estimates based solely on specific trends of DDR5 (market share gap and penetration rate expansion)."