The world's leading AI memory chipmaker, SK Hynix, raised over $26 billion last week selling American Depositary Receipts priced at $149 each, after its Korean shares more than tripled this year. The ADRs opened 14% above the offer price at $170 before ending their first trading day with a 12.8% gain.
"The current memory upcycle is tracking substantially stronger than expected, but our base case continues to assume normalisation in cycle dynamics, limiting upside at current levels," said Lorraine Tan, a director at Morningstar, who values the company at $160 per ADR.
"Despite accelerating artificial intelligence adoption, monetisation remains uncertain and profitability for key players, such as OpenAI, appears to be under pressure," she said. "Funding is also shifting toward debt or equity, raising concerns about the maintainability of current spending levels."
Analysts have said the large-scale investments in Korea had heightened uncertainty over the supply outlook and fuelled concerns that the current period of tight supply could eventually give way to an oversupply cycle.
"Our base case here is the fresh capacity in 2027 and 2028 coming up in earnest will improve supply dynamics, thereby leading to price erosion," said Jing Jie Yu, an equity analyst at Morningstar.
SK Hynix Chief Executive Kwak Noh-jung dismissed concerns about aggressive capacity expansion, telling Reuters that the memory industry is heading for its most severe supply shortage in 2027, forecasting that demand will continue to exceed the company's ability to produce memory chips well into the next decade.
Ryu Young-ho, a senior analyst at NH Investment & Securities, said investors were profit-taking after the conclusion of the U.S. listing, while sentiment also suffered from caution with regard to SK Hynix's second-quarter earnings.
He said investors had expected shipments of SK Hynix's HBM4 chips to increase from the second quarter, but that the increase does not appear to have materialised at scale.
Ryu also said investors had moderated earnings expectations because SK Hynix, with its greater exposure to the HBM market than crosstown rival Samsung, was set to benefit less from a recent rise in prices for conventional DRAM chips.
SK Hynix led the market for high-bandwidth memory chips with a 58% revenue share in the first quarter, whereas Samsung and U.S. competitor Micron Technology MU.O each held 21%, Counterpoint Research data showed.
HBM chips are primarily used in artificial intelligence systems for customers such as Nvidia NVDA.O and Alphabet's GOOGL.O Google.
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