SK hynix reportedly surpassed Samsung Electronics Device Solutions (DS; semiconductor) division operating profit last year as it recorded its highest-ever performance. Securities firms forecast that SK hynix's operating profit will increase further this year, indicating it will not lag behind Samsung Electronics' overall institutional sector.
According to the Korea Exchange on the 24th, SK hynix reported total revenue of 66.193 trillion won and operating profit of 23.4673 trillion won on a consolidated basis last year. Both revenue and operating profit are the highest since its establishment. Considering that Samsung Electronics' DS sector operating profit is estimated at around 15 trillion won, SK hynix has succeeded in reversing the situation for the first time.
Securities firms projected that this year SK hynix's operating profit will be similar to the overall operating profit of Samsung Electronics' institutional sector. Looking at the forecasts from 36 domestic and foreign securities firms, the average estimated operating profit for SK hynix this year is 34.69 trillion won. The forecast for Samsung Electronics' annual consolidated operating profit is 37.246 trillion won. It is expected that the operating profit gap between the two companies will narrow from 9.26 trillion won last year to 2.3 trillion won this year. Some securities firms, including NH Investment & Securities, predict that SK hynix's operating profit will exceed that of Samsung Electronics.
While it is a forecast, actual results cannot be prejudged, but going back to the time of Hyundai Electronics in 1990, this could be the smallest operating profit gap in 30 years and possibly even reversed.
Comparing the annual operating profits of Samsung Electronics and SK hynix, which have records in the Financial Supervisory Service's electronic disclosure system, in 1994, Samsung Electronics recorded an operating profit of 1.4468 trillion won and SK hynix (then Hyundai Electronics) recorded 658.8 billion won, showing a gap of 788 billion won, which was the minimum. In 1996, the second smallest gap was 2.0692 trillion won. After that, Samsung Electronics surged ahead, with the gap widening to 39.9237 trillion won in 2017.
A major factor in the narrowing operating profit gap between the two companies is attributed to the performance of high-bandwidth memory (HBM), a key semiconductor for artificial intelligence (AI). As SK hynix significantly leads in technology from the fifth generation of high-bandwidth memory (HBM3E), the prices of general memory semiconductors are underperforming. Securities firms have adjusted the operating profit forecast for Samsung Electronics downward by about 15 trillion won over the last three months. During the same period, the forecast for SK hynix's operating profit was only reduced by 800 billion won.
SK hynix is also expressing confidence in the HBM sector. SK hynix announced in a conference call following the management performance announcement that last year's HBM sales increased by more than 4.5 times compared to 2023. It also expects that the HBM3E 12-layer product, which is the most profitable, will account for more than 50% of shipments in the first half of this year.
Kim Kwang-jin, a researcher at Hanwha Investment & Securities, noted, "Since there is a high possibility that memory prices will continue to weaken throughout the year, if Samsung Electronics cannot increase HBM3E 12-layer sales to key U.S. customers, the situation could persist where it is at a disadvantage in terms of both shipment volume and prices compared to its competitors."
However, there are also opinions that the investment attractiveness is a separate issue. SK hynix is maintaining its current stock price thanks to its HBM strengths, but it may face adjustments due to the slowdown in the general semiconductor market if companies like Micron and Samsung Electronics enter the field.
Securities firms' average operating profit forecast for 2026 is 49.078 trillion won for Samsung Electronics and 38.648 trillion won for SK hynix, indicating a return to a widening gap. A representative from an asset management company said, "The stock price, which has moved according to the semiconductor cycle, is moving differently due to HBM, but it's uncertain whether this can continue."
Shares of Samsung Electronics and SK hynix traded at 53,700 won and 219,500 won, respectively, on the Korea Composite Stock Price Index market the previous day. Based on this, the upside potential compared to the target prices set by securities firms is 42.5% for Samsung Electronics and 18.5% for SK hynix.