안녕하세요!!!
I’m now fluent in Korean after a 2 hour crash course on Duolingo.
So while the headlines from SK Hynix’s earnings were bearish… I disagree entirely.
Revenue up 264% YoY and 52% QoQ.
Operating profits up 556% YoY and 62% QoQ.
But it seems like a lot of analysts are focused on the average selling price growth being lower than expected.
And here comes the nuance…
You can split memory manufacturing into 3 distinct product lines…
DRAM - short term working memory, what your laptop uses to keep browser tabs open
NAND - long term storage, so your hard drive
Traditionally these were the only 2 types of memory, but with the AI buildout… we now have a third
HBM - a high performance DRAM specifically designed for high end GPUs (the kind used in AI datacenters)
Hynix has a higher portion of HBM production (AI focused memory chips if you want a simple explanation) than it’s 2 largest competitors… so it didn’t benefit as much from the increase in selling price of DRAM and NAND chips…
But it has the lead in HBM… which is a longer term profit driver than the other 2.
So while many commentators are focused on the quarter-to-quarter growth… Hynix is focused on a longer term cycle. HBM4, their latest product line, hasn’t even begun mass production yet…
Which means the true pricing power will be reflected on a longer time horizon…
And while much of the short term noise is down to degenerate Korean retail investors who are leveraged to the gills with single stock ETFs… I have yet to see one serious investor (especially Korean domestic ones) turn bearish on Hynix or the memory trade.
My view remains the same… as long as the hyperscalers are still spending… the memory thesis is intact
Oliver