SK hynix Inc. (KRX:000660) continued its upward momentum on Tuesday, with shares trading at KRW 1,839,000 by 9:47 a.m. KST, a 3.14% gain in the early Seoul session, according to delayed data from Google Finance. This follows Monday's substantial 8.26% surge, bringing the two-day advance to 11.7% from Friday's close.
The consecutive gains shift the narrative for investors. Monday's jump could have been dismissed as part of a broader semiconductor rally. However, Tuesday's follow-through suggests a more targeted bet: that tight memory supply will support SK hynix's earnings even as the company invests heavily in new capacity.
Market Context and Divergence
On Monday, SK hynix closed at KRW 1,783,000, while Samsung Electronics (KRX:005930) gained 5.68%, and the KOSPI index finished 4.61% higher at 6,995.39, just shy of the 7,000 mark. Tuesday's trading showed less uniformity, with SK hynix adding another 3.14% while Samsung rose only about 0.8% in the same period. This divergence suggests investors are favoring SK hynix's purer exposure to high-bandwidth memory (HBM) rather than simply riding the index wave.
Financial Strength and Capacity Plans
SK hynix's operating fundamentals remain robust. The company reported preliminary second-quarter revenue of KRW 79.3187 trillion and operating profit of KRW 60.5426 trillion, achieving an operating margin of 76%. Its July 29 release also confirmed that HBM4 mass shipments have begun, with long-term agreements covering about 10 key customers.
The balance sheet provides further comfort. Cash and equivalents stood at KRW 88 trillion at quarter-end, while debt fell to KRW 18.6 trillion, resulting in a net cash position of KRW 69.4 trillion. This financial flexibility allows management to expand without over-relying on external financing.
The Supply-Demand Tightrope
The critical variable remains supply discipline. According to KB Securities research head Kim Dong-won, HBM4 uses "three times the wafer capacity" of conventional DRAM, as reported on September 7. The brokerage estimates that Samsung and SK hynix inventories are below 10 days, and values both companies near three times next year's expected earnings.
This creates a strategic tension: increasing HBM4 output can boost high-value sales but also reduces wafer capacity for ordinary DRAM, supporting prices in the near term. However, it also encourages every producer to invest more, raising the risk of future oversupply.
Key Checkpoints Ahead
Investors should watch several indicators. First, Tuesday's closing price relative to Monday's KRW 1,783,000 finish will signal whether the confirmation holds. Second, upcoming earnings must demonstrate that HBM4 volume growth does not significantly erode the 76% operating margin. Third, inventory levels are an early warning; a sustained rebound from sub-10-day levels would weaken the shortage argument before new fabs come online.
SK hynix has already made concrete capacity commitments, announcing in February plans to invest KRW 21.6 trillion through 2030 in its first Yongin fab, with the first cleanroom accelerated to February 2027. This provides a dated milestone for shareholders to assess execution.
Tuesday's gain suggests Monday's rally was more than a one-day relief move. However, it does not resolve the valuation debate. The current price implies that SK hynix can convert scarce HBM capacity into sustained cash earnings before industry investment catches up. The coming months will be telling.
