HBM Still Dominates... "2026 Is Still SK Hynix's Year" [Click e-Stock]

Only SK Hynix Expected to Meet Nvidia's Demands
Concerns Over Price Decline Are Overblown... DRAM Supply and Demand Also Favorable

Yonhap News

Despite various concerns, SK Hynix is expected to maintain its leading position in the high bandwidth memory (HBM) market next year. This is based on the assessment that, as of now, SK Hynix is the only company capable of quickly meeting Nvidia's heightened requirements.

On September 9, Hanwha Investment & Securities maintained its target price for SK Hynix at 360,000 won and its "Buy" investment rating, citing these factors. The previous day's closing price was 277,000 won.

Only SK Hynix Expected to Meet Nvidia's Demands

Even as price and market share competition among HBM suppliers intensifies, SK Hynix is still projected to hold a favorable position as an early entrant. With Nvidia’s requirements raised and considering TSMC’s R200 production schedule, it is necessary to be able to supply HBM4 12-high products in large volumes as early as the first quarter.

For SK Hynix, the customer sample (CS) completion is expected to be as early as November this year. In contrast, trailing competitors still face significant technical gaps in meeting the upgraded delivery requirements, such as thermal management and power efficiency, within a limited timeframe. Kwangjin Kim, an analyst at Hanwha Investment & Securities, stated, "Of the expected 8 billion gigabytes (Gb) of HBM4 demand next year, SK Hynix is projected to supply 5.7 billion Gb, accounting for about 70%. If competitors’ entry is delayed, SK Hynix’s market share could increase even further."

Concerns Over Price Decline Are Overblown... Depends on Transition Speed

Concerns about price declines for HBM3E 12-high products are also considered excessive. While price drops for existing products are inevitable during generational transitions, the key factor is the speed of transition. For 3E 12-high products, prices are expected to fall by around 10% in the fourth quarter of this year, with one or two additional drops likely next year. However, most of SK Hynix’s 3E 12-high sales next year are expected to be concentrated in the first half, when prices are relatively protected, making concerns over earnings contraction excessive.

Hanwha Investment & Securities estimated SK Hynix’s HBM revenue for next year at approximately $28.2 billion. This conservative estimate assumes a 15% price drop for HBM3E 12-high products and a 70% market share for HBM4 12-high products. The firm also noted that if the price decline for 3E 12-high narrows and the supply of 4 12-high increases, actual earnings could exceed expectations.

DRAM Supply and Demand Also Positive... Low Inventory, High Demand

The conventional DRAM supply and demand environment is also viewed as favorable. While it was initially expected that server DRAM demand related to artificial intelligence (AI) would slow toward the end of the year, demand remains very strong. The replacement cycle for servers invested in during the early days of COVID-19 has also arrived, leading to improvements in general server demand. As a result, major server DRAM contract prices are expected to continue rising through the fourth quarter of this year, with the rate of increase likely to expand compared to the third quarter.

On the supply side, upward price pressure continues. CXMT's transition to D5 has been delayed beyond initial expectations, and market entry for high-speed server products is also stagnating. Inventory levels for D5 products at Samsung Electronics and SK Hynix are very low, creating an environment that naturally drives prices higher.

Kim concluded, "Despite significant market concerns, SK Hynix is ultimately expected to lead the industry again next year. We maintain our top pick recommendation for SK Hynix among large-cap semiconductor stocks and remain positive on related equipment sectors that could benefit from a trickle-down effect."