SK Hynix Secures Major Microsoft AI Deal and Places Record ASML Order

SK Hynix secures major AI memory supply deal with Microsoft and places a record $8 billion ASML order to double EUV capacity, targeting HBM3E and future HBM4E production.

In a significant move to solidify its position in the competitive AI memory market, SK Hynix has announced a key partnership with Microsoft and placed an unprecedented equipment order. The developments, centered on March 26, underscore the company's strategic push to meet soaring demand for advanced semiconductors.

Strategic Partnership with Microsoft

The cornerstone of SK Hynix's recent activity is a high-level meeting in Seoul between its CEO, Kwak Noh-jung, and Microsoft's Executive Vice President for Cloud & AI, Scott Guthrie. The discussions yielded crucial supply agreements for specialized memory chips destined to power Microsoft's expanding artificial intelligence infrastructure. A central component of this collaboration is the provision of HBM3E memory, which will be integrated into Microsoft's latest AI accelerator, the Maia 200. This hardware is vital for Microsoft's plan to scale its global data centers to handle increasing generative AI workloads.

Beyond high-bandwidth memory (HBM), the cooperation also encompasses standard DRAM products. This aspect is particularly noteworthy given the current market dynamics, where average selling prices for DRAM surged by as much as 80 percent quarter-on-quarter in Q1 2026.

Unprecedented Investment in EUV Capacity

To fulfill these substantial supply commitments, SK Hynix is making a landmark capital investment. The company has placed an order with Dutch equipment manufacturer ASML for extreme ultraviolet (EUV) lithography machines valued at nearly $8 billion. SK Hynix describes this as the largest single publicly disclosed order in ASML's history. The total investment, amounting to approximately 11.95 trillion KRW, is scheduled through December 2027.

The objective of this massive expenditure is twofold: to double the company's EUV production capacity and to accelerate the transition to the 1c process node. This expansion not only secures manufacturing capabilities for current-generation HBM3E but also prepares the ground for upcoming HBM4E samples, which are slated for delivery before the end of this year.

Market Reaction and Analyst Outlook

Despite these strongly positive developments, SK Hynix shares experienced a 1.18 percent decline on Friday, closing at 922,000 KRW. Market observers attributed the pullback to profit-taking by international investors, triggered by Google's introduction of a new "TurboQuant" algorithm. Google claims this software innovation could reduce AI memory requirements by up to sixfold.

However, financial analysts were quick to contextualize this software announcement. They emphasize that for 2026, physical production capacity for high-end memory chips is already largely fully booked. In their view, software optimizations are unlikely to materially alter the supply-demand balance in the near term. Bolstered by supply contracts with major cloud providers and persistent server DRAM shortages, some market experts are forecasting an annual operating profit for SK Hynix of up to 148 trillion KRW for the full year 2026.

In a related development, asset manager RexShares has filed with the U.S. Securities and Exchange Commission (SEC) for a leveraged exchange-traded fund (ETF). This proposed product would aim to deliver twice the daily performance of SK Hynix stock, marking the first such fund focused on the company for the American market.