Going against Korean brokerage firms! SemiAnalysis: SK Hynix’s profits are expected to be strong—“when others are fearful, I am greedy”!

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The semiconductor research institute SemiAnalysis released a bullish report, directly countering the market panic triggered by the local Korean brokerage KIS lowering its profit forecast for SK Hynix, insisting that SK Hynix's DRAM performance outlook remains strong and characterizing the current adjustment as an entry opportunity.

SemiAnalysis analyst Ray Wang, in the report titled "Be Greedy When Others Are Fearful," predicts that SK Hynix's DRAM average selling price (ASP) in the second quarter of 2026 will rise by about 45% quarter-on-quarter, and operating profit for the DRAM segment will reach 55 trillion won. The report clearly points out that despite recent investor concerns over volatility in the memory segment, SK Hynix and other leading memory companies "remain one of the most attractive risk-reward targets in the semiconductor industry."

KIS Downgrade Sparks Selloff, But Emphasizes It's Not Due to Fundamentals Deterioration

The trigger for this round of volatility was the SK Hynix Q2 earnings forecast report released by Korean local brokerage KIS on July 13.

KIS forecast SK Hynix’s Q2 revenue at 80.9 trillion won, up 54% quarter-on-quarter and up 264% year-on-year; operating profit at 60.4 trillion won, up 61% quarter-on-quarter and up 556% year-on-year. The numbers themselves are extremely impressive, but the problem is—the market consensus expectation was 65 trillion won, so KIS’s forecast is about 8% below consensus, essentially directly declaring “expectations were too high.”

Once the news broke, SK Hynix’s share price quickly fell by more than 10%, breaking below the 2 million won mark, with a correction of 33% from its historical high on June 25.

KIS explained in the report the core reason for profit falling below consensus: SK Hynix’s HBM revenue accounted for a relatively high proportion, while HBM is generally sold under long-term supply agreements (LTA) with fixed prices; contract prices are relatively stable and can’t be increased significantly in the short term along with spot market prices. In contrast, average selling prices for regular DRAM and NAND are more flexible, with larger ASP increases during broad market price upcycles. KIS forecasts Q2 DRAM ASP to rise about 30% quarter-on-quarter and NAND ASP about 50%, but SK Hynix’s overall ASP increase is held back by fixed HBM contract pricing.

KIS also downgraded its operating profit forecasts for 2026 and 2027, respectively by about 9% and 11% compared to previous estimates. But the brokerage clearly stated that this downgrade was a “correction after factoring in already signed LTA contract pricing assumptions, not a concern for actual performance,” and maintained its target price of 3.8 million won and an ‘add’ rating.

SemiAnalysis Directly Responds: 55 Trillion Profit, Spot Price Surge Is the Core Driver

SemiAnalysis’s report directly refutes the above pessimism.

The institute noted that despite adjusting its pricing model and paying attention to recent market noise, its positive view of SK Hynix’s Q2 2026 DRAM performance “remains unchanged.” Its core forecast: DRAM average ASP up about 45% quarter-on-quarter, DRAM project operating profit around 55 trillion won.

SemiAnalysis believes that a roughly 60% surge in DRAM spot prices—is sufficient to support SK Hynix’s overall profitability, and the low-single-digit quarterly movement in HBM prices is stable and does not constitute a drag.

SemiAnalysis further emphasized that SK Hynix and other leading memory companies currently offer the “best risk-reward ratio” investment opportunity in the semiconductor industry, particularly after a period of adjustment.

Long-Term Logic Split: Single Quarter ASP Elasticity vs. Sustainable Profitability?

Although the two reports differ in short-term numbers, their positions on mid- to long-term fundamentals are not entirely opposed.

KIS is not pessimistic in its report. The brokerage expects a Q2 2026 operating profit margin of 74.6%, a historical high, with continued quarterly improvement thereafter. KIS believes that as the memory industry shifts to a 3- to 5-year LTA contract structure, the key driver of valuation will shift from “single quarter ASP growth” to “how long high profitability can be sustained,” and the expansion of LTAs is reducing the long-standing performance volatility in the memory sector.

SemiAnalysis more directly characterizes the current adjustment as a buying opportunity, believing that SK Hynix is the best risk-reward choice in the semiconductor sector at this stage.

Risk Warning and DisclaimerThe market has risks, invest cautiously. This article does not constitute individual investment advice, nor does it take into account special investment objectives, financial situations, or needs of specific users. Users should consider whether any opinions, viewpoints, or conclusions in this article suit their particular circumstances. Any investments made accordingly are at your own risk. ```