“SK hynix sees strength in both HBM and general-purpose memory ... growth to continue next year” — Eugene Investment & Securities

[Financial News] SK hynix is expected to continue growing its earnings next year, buoyed by rising prices for high-bandwidth memory (HBM) and general-purpose memory. Analysts say demand for server DRAM and enterprise storage is boosting profitability despite the stronger won, while next year’s HBM supply-price negotiations are also expected to support earnings.
According to Eugene Investment & Securities on the 12th, SK hynix’s operating profit for the third quarter of this year is estimated at 75.7 trillion won, up 25% from the previous quarter. Its operating margin is forecast to rise 1.1 percentage points over the same period to 77.4%.
Memory prices are the key to the earnings improvement. Eugene Investment & Securities expects DRAM’s average selling price to rise 20% quarter on quarter in the third quarter, with shipments, measured by storage capacity, increasing 12%. In particular, prices for general-purpose DRAM, excluding HBM, are estimated to climb 22%, driven by higher contract prices for server products.
NAND flash is also expected to contribute to improved profitability. Investment in process transitions is limiting production capacity, so shipment growth is expected to be just 3%, but prices are estimated to rise 23%, led by enterprise solid-state drives (SSDs). The expanded share of next-generation HBM4 in mass production is also seen as a factor that will boost both HBM shipments and selling prices.
Memory price increases are expected to continue through early next year.
Prices for general-purpose DRAM are expected to rise 9% in the fourth quarter of this year and 10% in the first quarter of next year, quarter on quarter. NAND prices are also forecast to increase 10% and 3%, respectively. Analysts say the supply shortage is unlikely to ease quickly next year, as the boost to production from transitions to finer process technology is slowing and it will take time to bring new factories online.
HBM price negotiations are also seen as proceeding in suppliers’ favor. The explanation is that, as general-purpose DRAM becomes more profitable, the opportunity cost of allocating the same production equipment to HBM is being reflected in supply prices.
Eugene Investment & Securities estimates that SK hynix’s average selling price for HBM will reach $3.31 per gigabit (Gb) next year, up 113% from this year. Accordingly, annual operating profit is forecast to increase 72%, from 263.4 trillion won this year to 454.1 trillion won next year. The operating margin forecast for next year is about 80%.
Son In-jun, an analyst at Eugene Investment & Securities, said, “The main focus is shifting from price momentum to the sustainability of earnings levels,” and forecast, “With quarterly results, the outcomes of HBM price negotiations, and expanded shareholder returns based on free cash flow, the share price will continue its gradual upward trend.”


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