Mirae Asset Securities said on the 7th that demand for server central processing units (CPUs) remains strong and trends in high bandwidth memory (HBM) are also favorable, so earnings are expected to rise for SK hynix. It kept its investment opinion at "Buy" and raised its target price to 2.7 million won from 2 million won. The previous trading day's closing price of SK hynix was 1,601,000 won.
Kim Young-geon, an analyst at Mirae Asset Securities, said, "AMD saw its server CPU revenue in the first quarter this year rise more than 50% from a year earlier and projected that second-quarter revenue would also grow more than 70% year over year," and noted, "CEO Lisa Su projected that this growth trend would continue in the second half."
AMD also doubled its outlook for the compound annual growth rate of the total addressable market (TAM) for server CPUs to +35% from +18%.
Kim said, "As artificial intelligence (AI) workloads shift from training to inference and agentic, the GPU-to-CPU installation ratio is expected to rise from 8:1 to at least 1:1," adding, "Accordingly, Big Tech is accelerating efforts to secure server CPUs."
Meta has contracted for tens of millions of cores of Amazon's Graviton CPUs, and Microsoft (MS) has also said it plans to greatly expand supplies of its in-house Cobalt CPUs.
In particular, CPU demand also leads to demand for conventional DRAM such as DDR/LPDDR, which is another positive.
SK hynix previously unveiled LPDDR6 DRAM based on the 10-nanometer-class sixth-generation (1c) process, achieving a per-pin transfer rate of up to 16 gigabits (Gb). Recently, it has been reviewing a plan to shift M15X DRAM investment from the 10-nanometer-class fifth generation (1b) to focus on 1c, so mix (product composition) optimization for commodity memory is expected amid strong server CPUs.
The market environment for HBM, a strength of SK hynix, is also favorable. Google's tensor processing unit (TPU) v8t increased its fifth-generation HBM (HBM3E) capacity by 13% compared with v7, and v8i increased it by 50%.
In addition, according to foreign media reports, the previous day Anthropic committed to spend up to $200 billion (about 293 trillion won) over the next five years on Google Cloud and chip usage. Also, Amazon's Trainium 3, launched early this year, is equipped with 144 gigabytes (GB) of HBM3E, a 50% increase over its predecessor.
Kim said, "This expansionary trend in Big Tech's HBM3E demand is positive in that it can secure a supplier-advantaged structure from a business landscape centered on Nvidia," adding, "Along with second-half shipments of sixth-generation HBM (HBM4), SK hynix's HBM revenue this year is estimated at 54 trillion won, up 72% from a year earlier."
Next year, the average selling price (ASP) of HBM is projected to rise 19.7%, and revenue is expected to reach 75 trillion won.