SK Hynix Is Sold Out and Spending $14 Billion to Stay That Way

SK Hynix posts record Q1 revenue and 72% operating margin, surpassing Nvidia. Analysts double price targets amid sold-out HBM capacity and potential Samsung strike boost.

The memory chip maker’s first-quarter numbers are stunning by any measure. Revenue hit 52.58 trillion won, operating profit surged to 37.61 trillion won, and the operating margin of 72 percent actually surpassed Nvidia’s 65 percent – a feat rarely achieved by a physical-component supplier in the AI supply chain. The result: every DRAM, NAND, and HBM product line is completely sold out, and not all customer orders can be fulfilled.

Analysts have scrambled to reset expectations. Nomura doubled its price target to 4 million won, arguing SK Hynix has shed its cyclical memory label in favor of structural growth status. KB Securities went to 3 million won, calling the current period a “zero-supply era” because no meaningful new capacity will come online before 2027. UBS lifted its target to 1.7 million won, while SK Securities also set a 3 million won target, flagging a forward price-to-earnings ratio of roughly 5.2 – a valuation that traditional cycle-based metrics cannot explain.

Shares closed Monday at 1,840,000 won, up 52.9 percent over the past month and 163.4 percent year to date. The gains reflect deep integration into Nvidia’s AI accelerator lineup: the US chip giant accounted for 14.8 percent of SK Hynix’s first-quarter revenue, or 7.78 trillion won, a 62.6 percent jump from a year ago and a new quarterly record. SK Hynix is the leading supplier of HBM3E memory, and the ramp of HBM4 is already underway, tightening its grip on Nvidia’s supply chain.

Yet the biggest near-term catalyst may come from a rival’s labor unrest. Samsung Electronics, which shipped the industry’s first sixth-generation HBM in February, faces an 18-day strike starting May 21 involving more than 50,000 workers after failed wage talks. Any disruption at Samsung could divert orders toward SK Hynix, whose technical edge is already evident: its 1c DRAM process yields around 80 percent, while Samsung’s HBM4 yield remains below 60 percent. The risk is that Samsung closes that gap in the second half of 2026, potentially pulling SK Hynix’s HBM market share down to 50-60 percent.

Capacity expansion is proceeding at a record pace. The M15X fab in Cheongju is in pilot production after more than 20 trillion won of investment, with mass production slated for November 2026 to churn out HBM3E, HBM4, and DRAM for HBM4E. The first fab in the Yongin cluster is scheduled for completion by May 2027, eventually adding around 350,000 wafers per month to bring total capacity to 900,000 wafers. Full-year capital and research expenditure has been budgeted at 50 trillion won, compared with 36.6 trillion won last year, and the company has poached roughly 200 engineers from Samsung in the past four months.

At the same time, SK Hynix is pursuing a US listing that could raise up to $14 billion through the sale of 2-3 percent of its shares. Confidential documents have been filed with the SEC, and the company hopes to complete the offering by the end of 2026. Proceeds would help finance the new fabs in South Korea and a facility in Indiana. CEO Kwak Noh-jung described the move as an effort to have the company revalued in the world’s largest equity market. Separately, SK Hynix is exploring a partnership with Intel on advanced 2.5D packaging using EMIB technology, as tight CoWoS capacity at TSMC has become a bottleneck in the AI chip production chain.

The supply squeeze shows no signs of easing. Goldman Sachs raised its forecast for the 2026 DRAM gap from 3.3 percent to 4.9 percent, and most analysts expect pricing pressure to persist well into 2027. Large cloud operators including Microsoft, Google, and Amazon are reportedly willing to co-finance expansions, even dedicating ASML lithography tools worth around $400 million apiece to secure dedicated memory lines. With a dividend of 375 won per share going ex-dividend on May 28 and payable June 30, the next major test comes before that: Nvidia’s earnings on May 20 will offer the clearest signal yet whether the AI investment wave that has propelled SK Hynix to these heights will continue at full throttle.