SK Hynix joins US$1 trillion club after Samsung, Micron on AI chip boom

[SEOUL] SK Hynix topped US$1 trillion in market value for the first time on Wednesday (May 27), joining its memory chip rivals Samsung Electronics and Micron Technology in reaching the milestone on an artificial intelligence-driven rally.

Shares of SK Hynix jumped as much as 14.9 per cent, taking the South Korean chipmaker’s market value to a record 1,680 trillion won (US$1.12 trillion) and propelling the country’s benchmark Kospi index to a record high.

Domestic rival Samsung surpassed US$1 trillion in market value for the first time on May 6, while US-listed Micron did so on Tuesday.

Strong demand for high-end memory chips used in AI chipsets like those designed by Nvidia has tightened supply and driven up prices, benefiting the world’s biggest makers of the semiconductors.

Memory chip prices doubled in the first quarter alone from the previous period and are forecast to climb up to 63 per cent in the current quarter due to AI data centre demand that has constrained supplies for smartphones, laptops and automobiles and helped top memory chipmakers report record profits.

There are only three Asian companies that have joined the US$1 trillion club, including TSMC. South Korea has become the first country other than the US to have more than one company reach that market value.

High-valuation targets

Led by the two chipmakers, South Korea’s Kospi stock index rose as much as 5.1 per cent to 8,457.09, its highest on record, with the sharp gains triggering a “sidecar” curb that temporarily halted algorithmic trading.

With Wednesday’s rally, Samsung and SK Hynix accounted for half of the index by market capitalisation.

The Kospi, which has emerged as the world’s best performer in a global AI boom, has risen 91 per cent so far this year, after rising 76 per cent last year.

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“We expect memory chip demand to continue exceeding supply by 2028 to keep price levels high,” Kim Young-gun, an analyst at Mirae Asset Securities in Seoul, said in a report, raising target prices for SK Hynix and Samsung by 18.8 pier cent and 14.6 per cent to 3.8 million won per share and 550,000 won, respectively.

SK Hynix shares traded around 2.3 million won on Wednesday.

Samsung shares also rose as much as 8 per cent to 323,000 won on Wednesday to a fresh record high, as unionised workers in South Korea voted to approve a tentative wage deal, averting a strike that threatened to rattle global chip supplies.

UBS said in a report on Tuesday that it had more than tripled its target price for Micron, citing “the structural changes AI has driven to the entire memory complex.”

Samsung shares have risen 149 per cent so far this year, while SK Hynix shares are up 215 per cent and Micron shares are up 245 per cent.

ETF interest

In recent weeks, US retail investors have invested billions of dollars into a new exchange-traded fund (ETF) that gives them exposure to Samsung and SK Hynix.

The first South Korean single-stock leveraged ETFs linked to Samsung and SK Hynix surged on their market debut on Wednesday, posting double-digit gains as semiconductor shares rallied.

The Korea Financial Investment Association’s website, which provides online courses required for retail investors to invest in leveraged ETFs, was briefly offline on Wednesday as investors rushed to access the courses, local media reported. REUTERS