ED SK hynix's stellar performance
The price of SK hynix shares is seen on a screen at Hana Bank's dealing room in Seoul, as the chipmaker became the most valuable firm on the benchmark KOSPI with a market capitalization of 2,084 trillion won ($1.35 trillion) as of 12:51 p.m. Monday. SK hynix overtook Samsung Electronics, which had held the top spot for 25 years and seven months. Yonhap
Value change on main Korean bourse should factor in AI boom, downturns
SK hynix overtook Samsung Electronics on Monday to become the most-valued listed Korean firm on the benchmark KOSPI, in a dramatic turnaround that would have been impossible to imagine until recently. SK hynix shares soared 5.6 percent, lifting the company's market capitalization to 2,080.4 trillion won ($1.35 trillion). Things turned around on Tuesday when both shares took a dive, with Samsung ending up back on top.
Monday's performance nevertheless, when compared to when SK acquired the company 14 years ago, showed a 130-fold jump in market capitalization. After withering under high debt and creditor-led stewardship, the company achieved this milestone by focusing on the competitive high-bandwidth memory (HBM) chips used in artificial intelligence (AI) systems.
Samsung Electronics saw its share price slide by 0.14 percent, lowering its market value to 2,066.7 trillion won Monday. By a more textbook measure, with Samsung's preferred shares also traded, the company's market value would still be larger than SK hynix at 2,246.4 trillion won. Yet for one day, it was replaced as the most valuable company after nearly 26 years of holding the top position. The incident signals a step toward an AI paradigm both industrially and in terms of the Korean stock market, with signs that even retail investors cannot miss. Korean businesses and policymakers must comprehend it as they prepare for the future.
Focusing on HBM chips has been paying off for SK hynix, with increasing demand for such products courtesy of customers like Nvidia and Google. SK hynix's strategy, for now, looks more powerful than Samsung Electronics', which offers a wider range of products including mobile, foundry and electronic appliances. SK hynix's share price has been rising partly due to a plan that is reportedly in the final stages to list American Depositary Receipts on the U.S. stock market.
The trajectory of the company, a unit of Hyundai then known as Hynix Semiconductors before SK's 2012 acquisition, once seemed destined to head south. In 2002, the heavily indebted company was almost sold to Micron before its board of directors decided against the sale. It was then put under creditor control for decades. After becoming SK hynix, it succeeded in developing the world's first HBM chip, a product that initially experienced a cold reception due to its high price and limited applications.
The firm's history should provide an insight on the emerging questions that appeared during Samsung Electronics' labor dispute last month over how to distribute its whopping first-quarter profits. Compounded in SK hynix's history is a mix of bold entrepreneurial decisions as well as state facilitation. The semiconductor industry itself involves state engagement; successive administrations in Korea have prioritized the semiconductor industry since the 1980s. The Lee Jae Myung administration's primary goal to turn Korea into one of the world's top three AI powerhouses may involve facilitation for Korean companies through new policies or deregulation. In doing so, they should bring about a consensus that more profits earned can be converted into investments for the future.
Technology is accelerating quickly, and memory chip rivals in China watch in wait while Japan is in the throes of revitalizing its semiconductor industry. SK hynix's surge to the top signals that global industrial structure is undergoing rapid change.
For Korean business sector, that the two top chipmakers are competing to bring a sense of market buoyance and technology changes can bring new players into the market. AI technologies are on a rapid rise despite skepticism, and both companies have been long been aiming for a competitive cutting edge. That approach to innovation, which further accelerates competition, should bring synergy as Korean chip firms and related companies leverage their technological capabilities amid the global industrial transformation.
Skepticism is always inevitable. With the second-quarter prospects out soon, it is important to remember that the so-called semiconductor supercycle is invariably bound to be cyclical. Innovation should continue, with Korea's distinctive style of dogged pursuit of growth.