Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
SK hynix stock surges after trading suspension lifted
A man walks past the logo of SK hynix during a semiconductor exhibition at Coex exhibition center in southern Seoul in this 2024 file photo. AFP-Yonhap
By Lee Min-hyung
Strong demand for memory chips casts rosy outlook for chipmakers' earnings
Chipmaker SK hynix posted a strong rally on Monday after the Korea Exchange lifted a trading suspension on large-cap stocks showing a "excessively" steep rise.
The memory giant closed at 640,000 won ($447), up 6.84 percent from the previous trading day, after maintaining a brisk uptrend throughout the session.
The rally was interpreted as a sign of growing investor confidence from the eased trading rule and cast a rosy outlook on its memory business, including high-bandwidth memory (HBM) for artificial intelligence (AI) accelerators.
On Dec. 11, the exchange operator placed a trading freeze on SK hynix shares under a regulation that halts stocks that have surged more than 200 percent from a year earlier. The rule is intended to prevent price rigging in small-cap stocks, but was also applied to large caps such as SK hynix, prompting criticism that the restriction is outdated.
After the exchange operator revised the rule to exempt the top 100 stocks on the benchmark KOSPI and secondary Kosdaq from suspension, SK hynix returned to trading, boosting investor sentiment toward chip shares.
SK hynix' HBM3E chips / Courtesy of SK hynix
Along with SK hynix, rival chipmaker Samsung Electronics also climbed to 119,500 won on Monday, up 2.14 percent from a session earlier, showing that Monday’s rally was not simply the result of the deregulation on SK hynix. Industry officials said this reflects the current situation in the semiconductor industry, where supply bottlenecks are prompting tech companies to scramble to secure sufficient memory chips.
"The easiest way of describing the current situation is that memory makers are dictating supplying terms to their clients," an industry official said. "Hyperscalers are getting only a certain portion of their orders despite accepting price hikes."
Reportedly, SK hynix and Samsung Electronics have raised the price of their HBM3E chips by about 50 percent, and tech firms are accepting those terms even though the product is not the latest HBM4.
"In the current supplier-dominated memory market, space (for clean room at fabs) remains limited and companies continue to pursue disciplined and strategic investment, indicating that the current upcycle may prove more prolonged," NH Investment & Securities analyst Ryu Young-ho said.
Ryu readjusted the price target for SK hynix to 880,000 won due to robust global demand for the firm’s high-performance memory chips.
Kiwoom Securities indicated that it expects SK hynix to achieve a major earnings surprise by chalking up an operating profit of some 16.2 trillion won between October and December, up 43 percent from a year earlier, due to the global AI frenzy.
Regarding Samsung Electronics, Hyundai Motor Securities said rising dynamic random access memory prices would have a positive effect on HBM price negotiations, raising its price target from 129,000 won to 143,000 won.