Samsung Outpaces SK Hynix Amid AI Market Changes

SK Hynix’s stock has skyrocketed, doubling as the demand for its cutting-edge high-bandwidth memory chips has surged. The company’s partnership with Nvidia primarily contributed to its overly high quarterly profits, with the firm reporting its highest quarter profit in Q2’24 in six years. However, despite this impressive performance, SK Hynix faces a potential downturn, with its share prices declining. This shift could pave the way for Samsung to overtake or close the gap with its rival.

With the global tech sell-off, SK Hynix’s stocks plummeted drastically, reporting a 10% decline, while Samsung only fell by 4.1%. Furthermore, Samsung’s memory-related stocks rose by close to 3%, while SK Hynix stocks tanked by a shocking 16% in July, giving a clear read on what to expect in the coming months. 

Roh Jongwon, chief investment officer at Infinity Global Asset Management, said that, given SK’s further expected declines, the gap between the two stocks is likely to at least “soften” from here. 

SK Hynix Market Performance

By October 2023, SK Hynix had surged by over 67% after closing its deal with Nvidia to supply high-bandwidth memory chips, beating Samsung, which had only risen by a marginal 24%. At the time, Samsung was grappling with a smartphone market slump and an unstable HBM market, explaining its slight improvement. 

SK Hynix’s impressive trajectory continued into 2024, with its market cap rising to $100 billion and its control of over 90% of the latest HBM output, making it the second-largest company in South Korea. However, coming into July, the company’s stocks declined, seeing a 3.9% dip before the month’s half.

The memory chip giant is now on track to build a new semiconductor manufacturing plant in Yongin Semiconductor Cluster just south of the country’s capital of Seoul in efforts to rile up its chip production, pledging to spend $6.8 billion in construction.

Samsung’s Stock Price To Rise

SK Hynix has been Nvidia’s primary supplier of memory chips. However, Nvidia’s management has decided to seek more high-bandwidth memory from other companies to meet the growing demand for its AI processors. Samsung is among the likely profiteers from Nvidia’s decision to expand its supply chain. 

The South Korean semiconductor giant is already ramping up its HBM output in anticipation of the Nvidia deal. It expects to deliver its next-generation HBM3E chip in two to four months. If the deal goes through, Samsung will look at impressive revenue figures and a substantial rise in stock prices, asserting its dominance over SK Hynix.

Investors are already eyeing Samsung’s stocks, expected to be worth over $2 billion by July’s end. Meanwhile, SK Hynix’s investors sold a substantial $1.5 billion worth of shares in the same month, marking the first significant pullout in three months. The investor shift highlights the changing market dynamics even as SK Hynix braces itself for more declines.