SK Hynix sharply narrows gap with Samsung’s market cap

SK Hynix Inc. has significantly raised its value by bolstering its presence in the artificial intelligence memory market, threatening Samsung Electronics Co.’ leadership in the semiconductor industry.

This month, its market capitalization surpassed half that of Samsung Electronics, South Korea’s most valuable company, for the first time.

SK Hynix, the world’s No. 2 memory chipmaker, has been at the fore of developing high-bandwidth memory (HBM) as a key supplier of Nvidia Corp, the world’s largest AI chip designer.

As of Jan. 21, SK Hynix’s market cap stood at 158.70 trillion won ($111 billion), more than half of Samsung Electronics’ 319.38 trillion won, according to the Korea Exchange.

That marked the narrowest gap between the two companies’ market value and a 10-percentage-point decrease in the difference since the start of this year.

At the end of 2024, SK Hynix’s market cap was equivalent to 39% of that of Samsung Electronics, the world’s No. 1 memory chipmaker — up from 21% the year prior and 16% at the end of 2022.

A decade ago, at the end of 2015, SK Hynix’s market value represented just 12% of Samsung Electronics'.

SK Hynix's share price has climbed 32% year-to-date. That compares to a 0.2% gain in Samsung shares even after it announced in November a 10-trillion-won buyback plan.

On Wednesday afternoon, their market cap narrowed further, with SK Hynix's shares up 3.67% to 226,000 won, its highest point since July 2024, while Samsung shares stayed flat at 53,500 won.

Fund managers said SK will further cement its leadership in the market of HBM optimized for AI applications.

“Samsung Electronics is far behind SK Hynix in terms of HBM technology,” said a fund manager at a Korean asset management company.

“Even if it (Samsung) supplies HBM to Nvidia, they will be used for low-end AI chips. It may find it difficult to challenge SK Hynix (in the HBM market),” he added.

UNDERVALUED

Analysts said SK Hynix is still undervalued.

According to data provider FnGuide, SK Hynix’s share price is trading at 6.11 times forward earnings for the next 12 months as of Jan. 20. That is half that of Samsung’s forward 12-month price-earnings ratio of 11.36.

In the fourth quarter of 2024, SK Hynix is estimated to have earned 8 trillion won, marking its record-high operating profit for a quarter. HBM, which produces higher margins than legacy chips, account for more than 40% of its DRAM sales.

For all of 2024, SK Hynix’s operating profits are estimated to have exceeded 23 trillion won. That far outstripped the estimated 15 trillion won in fourth-quarter operating profit from Samsung’s Device Solutions division, which oversees the semiconductor business.

Last year, SK Hynix succeeded in mass-producing 12-layer HBM3E, the newest generation of advanced chips for supply to Nvidia.

Analysts said Samsung’s struggle in the HBM market will keep its share price climb in check.

“Until it is confirmed that Samsung supplies (HBM) to Nvidia, its share price will remain within a boxed range,” said Roh Geun-chang, research head at Hyundai Motor Securities Co.

Samsung will likely ship 12-layer HBM3E to Nvidia starting from the third quarter of this year, according to JPMorgan. That schedule is about a half year later than SK Hynix.

The US bank forecast the HBM market expanding to $58 billion in 2026 from $38 billion in 2025, with Google, Amazon and Meta joining Nvidia in switching to advanced chips.

Write to Han-Shin Park and Si-Eun Lee at phs@hankyung.com
 

Yeonhee Kim edited this article.