Summary of SK Hynix Conference Call Company Overview - **Company**: SK Hynix - **Industry**: Memory Semiconductors - **Specialization**: DRAM (68% of sales in 2024) and NAND flash memory chips (29% of sales) [10][10] Key Points and Arguments Industry Dynamics - The memory semiconductor industry is experiencing an unprecedented upcycle, driven by strong demand for High Bandwidth Memory (HBM) and a robust server refresh cycle [1][9] - Forecasts indicate that DDR (Double Data Rate) pricing will approach the peak levels seen in 3Q18, with expectations of significant price increases in 1Q26 [1][2] Financial Forecasts - **Revenue Projections**: - 2026 revenue forecast is Won 215.4 trillion, a substantial increase from Won 97.6 trillion in 2025 [5][11] - 2027 revenue forecast is Won 236.7 trillion [5][11] - **Operating Profit**: - 2026 operating profit is projected to be Won 150.2 trillion, a 211% increase from previous estimates [3][11] - Operating margin expected to reach 82% by 4Q26, significantly above the previous peak of 65% in 3Q18 [1][2] - **Earnings Per Share (EPS)**: - 2026 EPS forecast increased by 21% to Won 152,310 [7][11] - 2027 EPS forecast also increased by 21% to Won 160,977 [7][11] Capital Expenditure - 2026 capital expenditure forecast raised to Won 38 trillion from Won 35 trillion, reflecting increased investment in production capacity [3][11] Market Position and Competitive Advantage - SK Hynix is expected to maintain its leadership in HBM with a projected 56% market share in 2026 [1][9] - The company is anticipated to benefit from AI compute semiconductor growth, particularly through its HBM products [1][9] Valuation and Price Target - Price target raised from Won 853,000 to Won 1,000,000, reflecting a valuation of 3.00x NTM book value [4][6] - Current share price as of January 9, 2026, is Won 744,000, indicating a potential upside of 34% based on the new price target [6][9] Additional Insights - The memory cycle is characterized by acute shortages, particularly in DDR due to high HBM demand and limited wafer capacity additions [9][9] - Strong contract pricing for DDR and NAND expected to continue into 2Q26 and beyond, with DDR contract pricing forecasted to rise 60% QoQ in 1Q26 [2][9] Important but Overlooked Content - The potential for SK Hynix to manage its manufacturing footprint in China, which may involve ramping down DRAM capacity due to restrictions on acquiring advanced EUV lithography tools [9][9] - The impact of AI and enterprise SSD demand on overall memory pricing and capacity allocation, which could moderate cyclical corrections in the long run [9][9] This summary encapsulates the key insights from the SK Hynix conference call, highlighting the company's strong market position, financial forecasts, and the broader industry dynamics influencing its performance.