SK hynix falls more than twice as much as Micron ... “It’s a Korea issue, not a semiconductor issue”

[Financial News] The valuation gap between SK hynix and U.S.-based Micron is widening again, analysts say. The view is that factors specific to the Korean market—not a deterioration in the memory semiconductor industry—are weighing on SK hynix’s share price, including foreign capital outflows and the possibility that Solidigm, an SK hynix subsidiary, could list in the United States. Kim Jun-young, an analyst at iM Securities, said in a report on the 12th that Micron’s premium over SK hynix in the 12-month forward price-to-earnings (P/E) ratio had recently widened to 1.60x. The gap, which had narrowed to around 1.40x in mid-September, widened again in about a month.
SK hynix’s 12-month forward P/E fell from 4.46x on the 23rd of last month to 3.70x recently, a drop of around 17%. Micron, by contrast, maintained a valuation of around 5.9x–6.9x over the same period. The discount widened as SK hynix’s share price fell faster than its earnings outlook.

The recent share-price performance of the two companies also shows a clear difference. SK hynix fell 9.7%, from 1,862,000 won on the 23rd of last month to 1,681,000 won on the 8th of this month. Over the same period, Micron slipped just 4.0%, from $1,071.88 to $1,029 on the 9th of this month. SK hynix’s decline was more than twice Micron’s.
Kim said it was difficult to interpret this difference as a sign that the memory cycle was deteriorating. “If the cycle were the cause, Micron, with its larger share of commodity memory, should have been de-rated first,” he said, adding, “The widening of Micron’s relative premium is largely attributable to Korea-specific factors.”
Foreign investor flows were cited as the most direct cause. On the 28th of last month, the first trading day after the Chuseok holiday, foreign investors were net sellers of 3.24 trillion won on the KOSPI market. Samsung Electronics and SK hynix each fell more than 5% that day. The explanation is that foreign buying has yet to recover decisively, continuing to weigh on the valuations of large-cap domestic semiconductor stocks.
The possibility of a U.S. stock-market listing for Solidigm is also a source of concern. Solidigm is a U.S. subsidiary established after SK hynix acquired Intel’s NAND and solid-state drive (SSD) business. If a listing goes ahead, Solidigm’s value could be recognized separately, but it could also raise concerns for SK hynix about a subsidiary’s duplicate listing and a holding-company-style discount.
Kim explained, “If Solidigm does not pursue a listing, its ability to raise funds could shrink, potentially reducing the scale of shareholder returns; if it does list, concerns about a structural discount could arise. For SK hynix shareholders, it is a no-win situation.” However, a Solidigm listing is still only a possibility under discussion, and no specific structure or timetable has been finalized.

SK hynix’s ongoing 40 trillion won share buyback and cancellation program is also seen as helpful for supporting the share price in the short term, but limited in its ability to fundamentally increase the valuation. Canceling treasury shares reduces the number of shares in circulation, boosting earnings per share (EPS) and lowering the P/E ratio, but it does not change how the market assesses the sustainability of the memory boom.
Kim said, “To reduce the discount applied to peak-cycle earnings, it must be confirmed that today’s high earnings can continue beyond 2028.” He added, “The turning point that could narrow the premium gap with Micron will be the additional shareholder-return measures announced alongside third-quarter results at the end of October.”
The process of separating winners from losers among artificial intelligence (AI)-related stocks is also underway in the United States. Concerns are growing about a structure in which AI companies and Big Tech firms are intertwined as investors, suppliers and customers, with investment funds, revenue and gains from equity valuations circulating among them. Kim said this resembles the discount associated with duplicate listings in the Korean stock market, but analyzed that domestic investor flows and corporate-governance concerns have been more strongly reflected in SK hynix’s recent relative weakness.
[email protected] Han Young-jun Reporter