JPMorgan on SK Hynix: The worst phase has passed, and market sentiment will gradually improve

Odaily News JPMorgan said in its latest research report on South Korean semiconductor giant SK Hynix that the recent decline in SK Hynix's stock price was mainly driven by multiple market headlines, including: 1) risk of reduction in HBM (High Bandwidth Memory) capacity per chip and price uncertainty; 2) unclear timeline for the announcement of shareholder return plans amid the potential push for a subsidiary IPO; 3) disclosure of large-scale infrastructure capital expenditure plans.

JPMorgan believes that the adjustment in HBM content specifications is a necessary step to address the current oversupply tightness, and market reports of a "50% decline in HBM prices" are inaccurate. As for the capital expenditure plans for infrastructure investment, although the scale is indeed significant, it is part of SK Hynix's strategic planning. The company aims to first secure fab capacity and prepare for additional wafer fabs after achieving its 1nm wafer production capacity target by 2030.

Given that SK Hynix management has clearly stated it will announce a new shareholder return plan by the end of next month, JPMorgan believes the worst phase may have passed and expects market sentiment toward the company's stock to gradually improve over the medium term.

Company-level catalysts worth watching next include: updates to the shareholder return plan (expected by the end of September); HBM contract price updates (expected by the end of September); and progress on the U.S. subsidiary's listing plans (within the next month).