SK Hynix Achieves $1 Trillion Market Valuation Amid AI Surge
SEOUL, May 27 (Reuters) – SK Hynix has marked a significant milestone by exceeding a market value of $1 trillion for the very first time on Wednesday, joining the ranks of its memory chip competitors, Samsung Electronics and Micron Technology, amidst an AI-fueled surge.
Shares of SK Hynix experienced a remarkable ascent, climbing as much as 14.9%, thus elevating the South Korean chipmaker’s market capitalization to an unprecedented 1,680 trillion won ($1.12 trillion) and concurrently propelling the nation’s benchmark KOSPI index to an all-time high.
Samsung, a local rival, reached its own trillion-dollar valuation on May 6, while U.S.-based Micron accomplished the feat just one day prior.
The burgeoning demand for premium memory chips employed in AI chipsets, particularly those crafted by Nvidia, has tightened supply chains and escalated prices, greatly benefiting the leading semiconductor manufacturers globally.
In the first quarter alone, memory chip prices surged, doubling from previous figures, with projections indicating a potential increase of up to 63% in the current quarter—an outcome primarily driven by the insatiable demand from AI data centers, which has simultaneously constrained supply to smartphones, laptops, and automobiles. This phenomenon has led to record profits among top memory chip producers.
Only three Asian firms, including TSMC, have entered the $1 trillion echelon. South Korea is now the pioneering nation, apart from the U.S., to witness more than one company attain this significant market benchmark.
Market Reactions and Valuation Targets
Led by these two semiconductor titans, South Korea’s KOSPI stock index soared by as much as 5.09% to settle at 8,457.09, establishing a new peak. This steep ascent prompted a “sidecar” curb, which momentarily suspended algorithmic trading activities.
The recent rally positioned Samsung and SK Hynix to collectively represent half of the KOSPI index by market capitalization.
The KOSPI has emerged as the premier global performer in the ongoing AI boom, achieving a staggering increase of 91% thus far in 2023, following a 76% climb in the previous year.
“We anticipate that the demand for memory chips will persistently outstrip supply until 2028, thereby maintaining elevated price levels,” remarked Kim Young-gun, an analyst at Mirae Asset Securities in Seoul.
In a report, he elevated target prices for SK Hynix and Samsung by 18.8% and 14.6%, respectively, projecting shares to reach 3.8 million won and 550,000 won, correspondingly.
On Wednesday, SK Hynix shares were traded around 2.3 million won.
Moreover, Samsung shares also saw impressive gains of up to 8%, reaching 323,000 won on Wednesday, constituting another record high.
This rally followed recent union votes by Korean workers approving a preliminary wage agreement, effectively averting a strike that could have disrupted global chip supplies.
UBS, in a report published on Tuesday, indicated that it had more than tripled its target price for Micron, attributing this development to “the structural transformations AI has instigated across the entire memory landscape.”
This year, Samsung shares have surged by 149%, while SK Hynix shares have increased by 215%, and Micron shares have ascended by an impressive 245%.
Surging ETF Interest
In recent weeks, U.S. retail investors have channeled billions of dollars into a newly established exchange-traded fund (ETF) that offers exposure to both Samsung and SK Hynix.
The initial launch of South Korea’s single-stock leveraged ETFs linked to Samsung and SK Hynix on Wednesday resulted in substantial double-digit gains as semiconductor shares escalated.
Local media reported that the Korea Financial Investment Association’s website, which provides online resources necessary for retail investors wishing to trade leveraged ETFs, briefly went offline on Wednesday due to overwhelming demand from individuals eager to access the courses.
Source link: Thestar.com.my.
