When one talked about South Korean technology, the company that always came to mind was Samsung. The semiconductor giant and the mobile industry He seemed to be the undisputed leader of his countrybut that’s about to change. Sk Hynix is the new darling of the South Korean technology industry, and it has achieved this driven by memory crisis.
Surprise in sight. Since 2000, Samsung Electronics had maintained imperial dominance in the Asian country, and since then it has been the flagship of its economy. However, things have changedbecause its eternal rival, SK Hynix, has been one of the great beneficiaries of the memory crisis.
Source: Reuters.
Seen and unseen. Yesterday the company’s shares reached their all-time high, briefly surpassing in market capitalization to Samsung, a colossal milestone that makes clear the impact that AI has on the global economy. Memory chips were a good business before, but now they are the star technological product. In yesterday’s session, however, SK Hynix dropped 12.5% in value, which made Samsung (which also fell significantly) regain that throne again in market capitalization…for now.
Sk Hynix rises from the ashes. In 2002, the company (then called Hynix Semiconductor) was drowning in debt. It had executed an aggressive expansion plan that did not work well and was on the verge of being sold to Micron (the offer was announcedIn fact, although was rejected). Its shares, which went public in 1996 at a price of 20,000 won, fell to 135 won in 2003, which made it considered a company doomed to failure. After years of crossing the desert and suffering the cyclical crises in the RAM memory market, the rise of AI has transformed it into one of the most valuable chip manufacturers on the planet, competing head-to-head with Samsung or Micron.
A goose that lays the golden eggs called HBM. The turning point came after a crucial strategic decision. In 2023 the semiconductor industry was in free fall in terms of prices, but at SK Hynix they decided not only to maintain, but to accelerate their investments in high bandwidth memory chips (High-Bandwidth Memory, or HBM). These memories are the most in demand in the field of GPUs aimed at data centers, and thanks to that commitment SK Hynix has taken 61% of the global HBM chip marketwell above the 17% that Samsung has.
Of commoditynothing. The president of SK Group—parent of SK Hynix—, Chey Tae-won, indicated how historically memory had become a commodity. It made no difference to buy a module from SK Hynix, Samsung or Micron because they were almost clone and interchangeable chips. With HBM technology the story changed: it is a component so optimized and integrated with AI chips, that Nvidia’s dependence on these chips is enormous.
Samsung defends its leadership. He surprise temporary has not gone down well with Samsung. Those responsible have indicated that market capitalization calculations should include preferred shares. If they are included, Samsung’s capitalization value would continue to be higher than that of SK Hynix. Samsung is currently the leader in this area, but the market trend seems to favor the theory that SK Hynix will end up being more valuable as long as this memory crisis continues.
The threat to DRAM. The danger for Samsung not only comes from SK Hynix being the undisputed leader in HBM memories, but from the fact that it is also is growing noticeably in conventional DRAM memories. According to Bank of America estimates, SK Hynix will expand its wafer production by 38% between 2025 and 2028, while Samsung will only do it 17%. At SK Hynix they are putting everything on the table, and that is causing the (economic) gap between both companies, previously enormous, to practically no longer exist.
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