"Isn't TSMC a small and medium-sized company?"... SK hynix could rise another 50%

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[Financial News] SK hynix announced its first-quarter results for this year on the 23rd. It was the company's best performance since its founding.
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On the day, SK hynix reported first-quarter sales of 52.6 trillion won and operating profit of 37.6 trillion won. It broke its previous record set in the fourth quarter of last year, when sales reached 32.8267 trillion won and operating profit came to 19.1696 trillion won.
The first quarter is traditionally the off-season for memory semiconductors. Even so, the company posted its best-ever results amid the ongoing Middle East crisis, which has disrupted global logistics and weakened consumption.
\r\nIt was a surprise result that topped market expectations from the securities industry. FnGuide had estimated SK hynix's first-quarter sales at 51.9346 trillion won and operating profit at 36.3955 trillion won.
Earlier, the strong earnings from rival Samsung Electronics surprised the market, raising expectations for SK hynix. Samsung Electronics said in a regulatory filing on the 7th that its consolidated first-quarter sales came to 133 trillion won and operating profit to 57.2 trillion won. That far exceeded last year's full-year operating profit of 43.601 trillion won.
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\r\nAt SK hynix's earnings announcement, attention also focused on its operating margin, a key measure of profitability. The company posted a record-high operating margin of 71.5% for the quarter.
\r\nThat figure far surpassed TSMC's first-quarter operating margin of 58%, long regarded as one of the most profitable in the semiconductor industry. TSMC also reported first-quarter net profit of 572.5 billion New Taiwan dollars, up 58% from a year earlier and above the market forecast of 543.3 billion New Taiwan dollars.
SK hynix's strong performance was driven by continued growth in AI server demand, which has led to shortages of DRAM and NAND flash memory and sent prices soaring. SK hynix has already secured a dominant position in the HBM market and is steadily supplying major global tech companies. Not only HBM, but also general-purpose DRAM used in servers, PCs and mobile devices has seen prices surge on shortages. According to DRAMeXchange, the average fixed transaction price last month for a generic DDR4 8Gb 1Gx8 DRAM product for PCs stood at $13. It has risen for 11 straight months since April last year.
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The outlook ahead is even brighter. Kim Dong-won, an analyst at KB Securities, projected SK hynix's annual operating profit this year at 25.1 trillion won and said, "We believe its move into the global top 5, surpassing Microsoft and Google, is becoming increasingly visible."
Kim also said, "Samsung Electronics and SK hynix are currently in an excessively discounted range," adding, "Given the pace and scale of earnings improvement, their market capitalizations should be worth more than 200 trillion won and 130 trillion won, respectively."
As of the 22nd, SK hynix's market capitalization stood at 87.1 trillion won, suggesting 49.25% upside remains for the stock.
Brokerages have also been raising their target prices for SK hynix one after another. Samsung Securities raised its target price from 1.3 million won to 1.8 million won, an increase of about 38.5%, while Sangsangin Investment & Securities Co., Ltd. also lifted its target to 1.4 million won. LS Securities Co., Ltd. raised its target from 1.45 million won to 1.5 million won, reflecting improving industry conditions and earnings momentum.
fair@fnnews.com Han Young-joon Reporter