SK Hynix is making a calculated bet that short-term profitability outweighs the race to next-generation memory, deliberately slowing HBM4 production to chase fatter margins in DDR5. The decision, announced just days after the company raised a record $26.5 billion in its Nasdaq debut, has triggered a 10.1% weekly slide in Seoul-listed shares, though the stock remains up 222% year to date.
The chipmaker has converted production lines originally slated for the HBM3E-to-HBM4 transition to DDR5 standard memory instead. Analysts estimate the operating margin on DDR5 will hit roughly 90% this year, far exceeding the returns from accelerating the next HBM generation. The result: meaningful HBM4 volumes are now not expected until the third quarter of 2026, according to market researcher TrendForce, with full-year supply forecasts cut from 4.5 billion to 4 billion gigabits.
The shift comes on the heels of a blockbuster first quarter. SK Hynix reported Q1 2026 revenue of 52.58 trillion won — the first time it has breached 50 trillion won in a single quarter — and operating profit of 37.61 trillion won, translating to a record operating margin of 72%. Contract prices for DDR5 surged 90–95% quarter-on-quarter in Q1, and the company’s average selling price for DRAM rose by the mid-60% range.
Despite the weekly selloff, the stock’s technical picture suggests profit-taking rather than a fundamental breakdown. The 14-day RSI stands at 46.1, indicating neither overbought nor oversold conditions. With an annualized 30-day volatility above 114%, the retreat from the 52-week high of 2,987,000 won — reached on June 25 — looks more like a breather after a historic rally. The close on Friday at 2,180,000 won sits 27% below that peak but still 343.5% above the October 2025 trough of 491,500 won.
Should investors sell immediately? Or is it worth buying SK Hynix?
CEO Kwak Noh-jung had earlier warned of the most severe memory-chip shortage in industry history, projecting demand outstripping supply until at least 2030. That backdrop supports the bullish case: SK Hynix holds roughly 58% of the HBM market, with leadership in HBM3E and the upcoming HBM4, and the global HBM market is expected to grow 58% next year to $54.6 billion. The $26.5 billion IPO proceeds are earmarked for new fabs in South Korea, advanced packaging facilities, and EUV scanners from ASML — investments that could lock in those advantages.
But the bärische perspective is equally real. The memory industry is notoriously cyclical, and the current boom could sow the seeds of overcapacity when new facilities from SK Hynix (M15X), Micron (Idaho), and Samsung (Pyeongtaek P5) begin ramping from mid-2027 to 2028. Meanwhile, analysts describe the capital injection as “significant but not transformative” against plans to invest over 100 trillion won (roughly $66 billion) annually this decade.
The most immediate risk lies in the DDR5 pivot itself. HBM already accounts for over 40% of revenue, and the entire 2026 HBM supply was sold out earlier this year. Slowing HBM4 development while Samsung and Micron race ahead could cede long-term leadership in the very product category that justifies SK Hynix’s premium valuation. The company’s own CEO has acknowledged that building new wafer capacity takes four to five years, with a projected supply gap of more than 20% — a gap competitors may be quicker to fill.
For now, the market is weighing whether SK Hynix can have it both ways: pocket extraordinary DDR5 margins today while maintaining dominance in tomorrow’s HBM4 market. The record Nasdaq listing gives it the financial firepower to try. But the clock is ticking, and the next two quarters will reveal whether the DDR5 detour is a shrewd tactical move or the beginning of a strategic stumble.
Ad
SK Hynix Stock: Buy or Sell?! New SK Hynix Analysis from July 11 delivers the answer:
The latest SK Hynix figures speak for themselves: Urgent action needed for SK Hynix investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from July 11.
SK Hynix: Buy or sell? Read more here...
