SK Hynix Inc. (000660): Goldman Sachs reiterates Buy on SK Hynix as tight memory supply and a richer HBM mix support pricing and profitability.

Overview

This virtual-meeting follow-up summarizes SK Hynix management's outlook for memory pricing, HBM, capacity, technology migration, long-term agreements and shareholder returns. Goldman Sachs reiterates Buy, arguing that persistent supply constraints and stronger premium-HBM mix underpin the fundamental outlook.

Core views

SK Hynix expects quarter-on-quarter memory pricing growth to continue through the remainder of 2026. Management attributed this to persistent supply tightness, a growing contribution from high-end HBM, and a base effect from lower-than-expected second-quarter pricing, while acknowledging that the growth rate may decelerate. For HBM, the company expects ASP and margins to increase in the second half of 2026 versus the first half as HBM4 represents a greater share of revenue toward year-end. Looking into 2027, it expects HBM ASP to rise further because both conventional DRAM and HBM remain tight and premium products form a larger mix. Capacity constraints make technology migration a key mechanism for growth. Existing fab capacity is nearly fully utilized, while the meaningful capacity at M15X is expected to be used mainly for HBM. SK Hynix reiterated that the Yongin fab is planned to open in February 2027, although production output is not expected until the end of 2027. In NAND, it plans to use the M17 fab and remaining Solidigm fab space. For process migration, the company intends to shift domestic DRAM production from the 1a nm node to the 1c nm node and convert a substantial part of domestic 176-layer NAND production to 321-layer NAND, targeting a bit crossover by the end of 2026. Management remained constructive on long-term agreements. With server memory, including HBM, accounting for about 60% of DRAM revenue, it considers LTA coverage of at least 50% potentially achievable, although it has no stated coverage-ratio target. The company sees LTAs as improving demand visibility, sharing risk with customers, aligning output with demand and increasing capital-expenditure efficiency. The report also flags near-term foreign-exchange sensitivity: nearly 100% of revenue is USD-denominated, while less than 50% of operating expenses are foreign-currency based. Management said additional shareholder-return details should be finalized around the 3Q26 earnings announcement, with buybacks and dividends to be balanced. Goldman Sachs reiterates Buy and values the shares using a 2026E/27E average P/E approach, applying a 9.0x target P/E multiple to derive a 12-month target price of W3,500,000.

Analysis framework

Goldman Sachs bases its view on management commentary from the virtual meeting, linking memory supply tightness, product mix and capacity constraints to pricing and profitability. It then assesses technology-migration plans, LTA benefits, FX exposure and shareholder-return timing, and values the shares on a 2026E/27E average P/E basis.

Methodology notes

• Industry AnalysisSupply-demand framework

  Memory supply-demand analysis

  The report links persistent supply tightness in conventional DRAM and HBM to continued pricing growth and higher HBM ASPs.

• Valuation methodsP/E and PEG Valuation

  2026E/27E average P/E-based 12-month target price

  Goldman Sachs applies a 9.0x target P/E multiple to its average 2026E and 2027E earnings basis to calculate the W3,500,000 target price.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• SK Hynix Inc. (000660.KS)

  Primary covered company; expected to benefit from tight memory supply and a higher HBM product mix.

  Strengths

  Persistent supply tightness, HBM4 mix expansion, planned DRAM and NAND technology migration, and significant server-memory exposure.

  Weaknesses

  Existing fab capacity is nearly fully utilized and meaningful Yongin output is not expected until end-2027.

  Comparison

  Samsung's progress in HBM could affect SK Hynix's HBM revenue and profit.

  Risks

  Memory supply-demand deterioration, weaker device and server demand, delayed technology migration, lower AI-related capex and FX fluctuations.

Key data

• 12-month price targetW3,500,000Based on a 2026E/27E average P/E valuation using a 9.0x target multiple.
• Current priceW1,868,000Price as of the 21 September 2026 close.
• Indicated upside87.4%Reported upside to the 12-month target price.
• Server memory including HBM share of DRAM revenue~60%Management cited this mix in discussing LTAs.
• Potential LTA coverageAt least 50%Management believes this could eventually be possible, without a specific coverage target.
• Yongin fab timingOpening planned for February 2027; output likely from end-2027Timing reflects limited near-term wafer-capacity additions.
• Target P/E multiple9.0xApplied in the 2026E/27E average P/E-based target-price methodology.

Impact & implications

The report argues that tight supply, HBM mix improvement and process migration should support SK Hynix's memory pricing and margins, while LTAs may improve demand visibility and capital-allocation efficiency. It also highlights FX exposure as a near-term earnings variable and identifies shareholder-return details as a forthcoming catalyst.

Risks

• A major deterioration in memory supply-demand conditions or a delay in technology migration could weaken results.
• Weaker smartphone, PC or server demand could reduce conventional-memory demand.
• Positive progress in Samsung's HBM business could pressure SK Hynix's HBM revenue and profit.
• Lower AI-related capital expenditure could reduce HBM demand and thereby affect HBM revenue and profit.
• Foreign-exchange fluctuations could affect near-term earnings because revenue is predominantly USD-denominated while less than half of operating expenses are foreign-currency based.

What to watch

• Additional shareholder-return details expected around the 3Q26 earnings announcement, including the balance between buybacks and dividends.