SK hynixNarrow moat

SKHY — overall economic moat

Investment snapshot
Narrow moat↘ NarrowingConfidenceLowValuationCheap
Strongest advantageHBM lead and stack yields
Greatest threatThe memory cycle, with no backlog to cushion it
Key metricOperating margin, quarter by quarter
Verdict: The best quarter memory has ever produced, from a company whose DRAM share fell from 34.8% to 29.1% during it — a genuine HBM lead being consumed, sold with no contract to slow the turn in either direction, at a low multiple that is the market's forecast rather than its oversight.
📈 SKHY valuation, revenue & earnings — P/E, P/S, revenue, EPS →

SK hynix makes memory chips, and for most of its life that was a dull sentence. Memory is the commodity of the semiconductor world: standardised, interchangeable, bought on price, and produced by a handful of firms who have historically taken turns destroying each other's margins. Then the AI build-out arrived, and one corner of memory stopped being a commodity.

Where SK hynix's ₩97.1 trillion came from, 2025DRAM — 77%NAND flash — 21%Other — 2%Form 424B4 prospectus; by Q2 2026 NAND had reached 27.7% of sales
Two products, and in 2026 the smaller one started growing faster.

The company sells two things. DRAM — the fast working memory a processor reads from — was 77.1% of sales in 2025. NAND flash, which stores data when the power is off, was 21.3%1 — on revenue of ₩97,147 billion, roughly ₩74.9 trillion and ₩20.7 trillion respectively. On those numbers SK hynix is the second-largest DRAM maker in the world with 29.1% of the market and the second-largest NAND supplier2. Second place, twice. That is not usually the profile of a company worth ₩1,230 trillion.

What changed sits inside the DRAM line. High-bandwidth memory — HBM — is DRAM stacked vertically and wired through the silicon itself, and it is the memory an AI accelerator cannot work without. SK hynix was first to build it, first to qualify it with the company that sells most of the world's accelerators, and it holds 56.4% of that market3. In a business where the three DRAM makers between them take more than 90% of revenue4, SK hynix is second at the commodity and first at the part that isn't one.

The results have gone somewhere no memory company has been. Revenue of ₩97.1 trillion in 2025 became ₩79.3 trillion in the second quarter of 2026 alone — up 257% on the year — at a 76% operating margin5. For scale, the entire company lost ₩9.1 trillion in 20236. Two and a half years separate those two facts, and nothing about the factories changed in between.

An owner should hold two things in mind at once. The first is that this is still memory, and memory has never once gone up in a straight line. The second is more specific: SK hynix's share of DRAM fell from 34.8% for 2025 to 29.1% in the first quarter of 20267, in the middle of the best demand it has ever seen. The rest of these pages are about how much of this is a franchise and how much is the best seat in the best year the industry has ever had. DRAM and NAND flash are each taken in turn in The Revenue Lines, with the small foundry line explained in its overview.

The number that tests this moat
Reported
Revenue, and where it comes from
₩97,147B in 2025 — DRAM 77.1%

DRAM products were 77.1% of sales in 2025 and 77.3% in the first quarter of 2026; NAND was 21.3% and 22.0%. Almost the entire result comes from one of the two halves, and inside that half almost all of the incremental profit comes from high-bandwidth memory. Watch the DRAM/NAND split: if NAND ever grows at DRAM's rate, the Intel acquisition bought something structural.

Source: SK hynix Form 424B4 prospectus (10 July 2026) ↗
Moat scorecardHow ratings work →
Switching costs4/10
Network effects3/10
Pricing power6/10
Hard to replicate7/10
Disruption resistance4/10
Overall durability5/10

A real HBM lead protected by stack yields and a three-player DRAM structure — sold with no backlog, into two countries, at the top of a cycle.

Dig deeper
DIG DEEPER 01
The Revenue Lines
Two memories priced by the quarter: DRAM carried the upcycle, and in 2026 NAND started growing faster.
DIG DEEPER 02
The Moat
The moat is not the chips; it is a generation's head start in stacking them, protected by yields nobody can buy and an industry with only three…
DIG DEEPER 03
Competitors
In memory nobody wins by taking a customer, because the buyer qualifies all three and splits the order -- so rivals compete for allocation, which is…
DIG DEEPER 04
Major Clients
One customer was 23.9 percent of last year's revenue, SK hynix names nobody, and the concentration that actually matters -- one accelerator maker…
✦ Future bets — beyond today's moat
✦ FUTURE BET 01
The Future Bets
A Nasdaq listing, 88 trillion won of cash and a NAND business still waiting its turn -- none of which is what the share price is currently arguing…
⚠ Threats to the moat
⚠ THREAT 01
The Cycle Has Not Been Repealed
Three years ago this company sold memory for less than it cost to make; the fabs, the engineers and the industry structure are the same ones.
⚠ THREAT 02
Two Customers, Two Countries, One Product
The revenue concentration is disclosed and high; the profit concentration is undisclosed and higher, because almost all of the incremental margin…
◆ What the market may be missing
◆ THE VARIANT VIEW
What the Market Isn't Pricing In
A record quarter that missed, a stock 44 percent off its high, and a low multiple on peak earnings -- which in memory has never been a bargain the…
◆ THE VARIANT VIEW
Inside the Latest Quarter (Q2 2026)
Net income larger than revenue, because 63 trillion won of it came from selling a stake in a competitor -- and the operating result underneath it was…
References
  1. ReportedDRAM products were 77.1% of total sales in 2025 and NAND flash 21.3%.
    SK hynix Inc., Form 424B4 prospectus — risk factors and the offering (SEC, CIK 2120882). 'A substantial portion of our sales is attributable to a limited number of customers located in the United States and China. Our two largest customers represented 14.8% and 12.4%, respectively, of our total revenue in the first quarter of 2026 and our largest customer represented 23.9% of our total revenue in 2025.' DRAM products were 77.3% of total sales in Q1 2026 and 77.1% in 2025; NAND flash 22.0% and 21.3%. NAND mass production is transitioning from 176-layer technology to 238- and 321-layer technologies. The offering was 177,900,000 ADSs at US$149.00 each, representing 17,790,000 common shares against 712,702,365 outstanding, each ADS one-tenth of a share; Baillie Gifford Overseas, funds managed by Coatue Management and Situational Awareness Partners indicated a non-binding interest of up to US$7 billion. — FY2025 and Q1 2026 · publ. 2026-07-10 · source ↗
  2. Third-party estimateSK hynix was the second-largest DRAM supplier at 29.1% of revenue and the second-largest NAND supplier at 18.5% in the first quarter of 2026, per IDC.
    SK hynix Inc., Form 424B4 prospectus for its Nasdaq offering (SEC, CIK 2120882) — FY2025 revenue W 97,147bn, cost of sales W 38,456bn, gross profit W 58,691bn, S&A W 5,019bn, R&D W 6,466bn and profit for the year W 42,948bn, against FY2024 revenue W 66,193bn / profit W 19,797bn and FY2023 revenue W 32,766bn / cost of sales W 33,299bn / gross loss W 533bn / loss for the year W 9,138bn; Q1 2026 revenue W 52,576bn, gross profit W 41,679bn, profit W 40,346bn. IDC market shares for Q1 2026: second in DRAM at 29.1%, first in HBM at 56.4%, second in NAND at 18.5%, with the three DRAM producers together above 90% of revenue. DRAM products were 77.1% of total sales in 2025 and 77.3% in Q1 2026; NAND 21.3% and 22.0%. Competitors named: Samsung Electronics, Micron Technology and CXMT in DRAM; Samsung Electronics, Kioxia, Micron Technology and Sandisk in NAND; competitive factors listed as 'pricing; manufacturing costs, yields and product availability; product performance, quality and reliability'. First to develop HBM using TSV packaging, commercialised HBM3E in 2024 and developed HBM4 in 2025; HBM carried a per-gigabyte price premium of more than five times traditional DRAM in 2025. M15X cleanroom opened October 2025 with wafer input from Q1 2026; Yongin construction began February 2025 with the first fab's phase-one cleanroom expected Q1 2027; an advanced packaging plant (P&T7) is under construction in Cheongju and one is planned in Indiana for the second half of 2028. Intel's NAND business cost US$6.6bn in December 2021 plus US$2.2bn in March 2025, operated as Solidigm; NAND mass production is transitioning from 176-layer to 238- and 321-layer technologies. Gartner forecasts DRAM revenue of US$143bn in 2025 rising to US$401bn in 2027, HBM US$33bn to US$86bn and NAND US$68bn to US$341bn. A substantial portion of sales is attributable to a limited number of customers located in the United States and China; the two largest were 14.8% and 12.4% of revenue in Q1 2026 and the largest was 23.9% of revenue in 2025. The offering was 177,900,000 ADSs at US$149.00, each ADS one-tenth of a common share, representing 17,790,000 shares against 712,702,365 outstanding; Baillie Gifford, Coatue and Situational Awareness Partners indicated non-binding interest of up to US$7bn. — FY2023-FY2025 and Q1 2026 · publ. 2026-07-10 · source ↗
  3. ReportedSK hynix was first to develop HBM using through-silicon-via packaging and held 56.4% of the HBM market by revenue in the first quarter of 2026.
    SK hynix Inc., Form 424B4 prospectus for its Nasdaq offering (SEC, CIK 2120882) — FY2025 revenue W 97,147bn, cost of sales W 38,456bn, gross profit W 58,691bn, S&A W 5,019bn, R&D W 6,466bn and profit for the year W 42,948bn, against FY2024 revenue W 66,193bn / profit W 19,797bn and FY2023 revenue W 32,766bn / cost of sales W 33,299bn / gross loss W 533bn / loss for the year W 9,138bn; Q1 2026 revenue W 52,576bn, gross profit W 41,679bn, profit W 40,346bn. IDC market shares for Q1 2026: second in DRAM at 29.1%, first in HBM at 56.4%, second in NAND at 18.5%, with the three DRAM producers together above 90% of revenue. DRAM products were 77.1% of total sales in 2025 and 77.3% in Q1 2026; NAND 21.3% and 22.0%. Competitors named: Samsung Electronics, Micron Technology and CXMT in DRAM; Samsung Electronics, Kioxia, Micron Technology and Sandisk in NAND; competitive factors listed as 'pricing; manufacturing costs, yields and product availability; product performance, quality and reliability'. First to develop HBM using TSV packaging, commercialised HBM3E in 2024 and developed HBM4 in 2025; HBM carried a per-gigabyte price premium of more than five times traditional DRAM in 2025. M15X cleanroom opened October 2025 with wafer input from Q1 2026; Yongin construction began February 2025 with the first fab's phase-one cleanroom expected Q1 2027; an advanced packaging plant (P&T7) is under construction in Cheongju and one is planned in Indiana for the second half of 2028. Intel's NAND business cost US$6.6bn in December 2021 plus US$2.2bn in March 2025, operated as Solidigm; NAND mass production is transitioning from 176-layer to 238- and 321-layer technologies. Gartner forecasts DRAM revenue of US$143bn in 2025 rising to US$401bn in 2027, HBM US$33bn to US$86bn and NAND US$68bn to US$341bn. A substantial portion of sales is attributable to a limited number of customers located in the United States and China; the two largest were 14.8% and 12.4% of revenue in Q1 2026 and the largest was 23.9% of revenue in 2025. The offering was 177,900,000 ADSs at US$149.00, each ADS one-tenth of a common share, representing 17,790,000 shares against 712,702,365 outstanding; Baillie Gifford, Coatue and Situational Awareness Partners indicated non-binding interest of up to US$7bn. — FY2023-FY2025 and Q1 2026 · publ. 2026-07-10 · source ↗
  4. Third-party estimateThe three DRAM producers together account for more than 90% of DRAM revenue.
    SK hynix Inc., Form 424B4 prospectus for its Nasdaq offering (SEC, CIK 2120882) — FY2025 revenue W 97,147bn, cost of sales W 38,456bn, gross profit W 58,691bn, S&A W 5,019bn, R&D W 6,466bn and profit for the year W 42,948bn, against FY2024 revenue W 66,193bn / profit W 19,797bn and FY2023 revenue W 32,766bn / cost of sales W 33,299bn / gross loss W 533bn / loss for the year W 9,138bn; Q1 2026 revenue W 52,576bn, gross profit W 41,679bn, profit W 40,346bn. IDC market shares for Q1 2026: second in DRAM at 29.1%, first in HBM at 56.4%, second in NAND at 18.5%, with the three DRAM producers together above 90% of revenue. DRAM products were 77.1% of total sales in 2025 and 77.3% in Q1 2026; NAND 21.3% and 22.0%. Competitors named: Samsung Electronics, Micron Technology and CXMT in DRAM; Samsung Electronics, Kioxia, Micron Technology and Sandisk in NAND; competitive factors listed as 'pricing; manufacturing costs, yields and product availability; product performance, quality and reliability'. First to develop HBM using TSV packaging, commercialised HBM3E in 2024 and developed HBM4 in 2025; HBM carried a per-gigabyte price premium of more than five times traditional DRAM in 2025. M15X cleanroom opened October 2025 with wafer input from Q1 2026; Yongin construction began February 2025 with the first fab's phase-one cleanroom expected Q1 2027; an advanced packaging plant (P&T7) is under construction in Cheongju and one is planned in Indiana for the second half of 2028. Intel's NAND business cost US$6.6bn in December 2021 plus US$2.2bn in March 2025, operated as Solidigm; NAND mass production is transitioning from 176-layer to 238- and 321-layer technologies. Gartner forecasts DRAM revenue of US$143bn in 2025 rising to US$401bn in 2027, HBM US$33bn to US$86bn and NAND US$68bn to US$341bn. A substantial portion of sales is attributable to a limited number of customers located in the United States and China; the two largest were 14.8% and 12.4% of revenue in Q1 2026 and the largest was 23.9% of revenue in 2025. The offering was 177,900,000 ADSs at US$149.00, each ADS one-tenth of a common share, representing 17,790,000 shares against 712,702,365 outstanding; Baillie Gifford, Coatue and Situational Awareness Partners indicated non-binding interest of up to US$7bn. — FY2023-FY2025 and Q1 2026 · publ. 2026-07-10 · source ↗
  5. ReportedRevenue of ₩79,318.7bn in the second quarter of 2026, up 256.8% year on year, with operating profit of ₩60,542.6bn — a margin near 76%.
    SK hynix Inc., preliminary results of operations for the second quarter of 2026 (SEC Form 6-K, 29 July 2026) — revenue W 79,318,746 million, up 50.9% on Q1 2026's W 52,576,287 million and 256.8% on Q2 2025's W 22,231,952 million; operating profit W 60,542,608 million, up 61.0% sequentially and 557.2% year on year, an operating margin of about 76%; profit before income tax W 122,708,355 million; profit for the period W 93,922,593 million. First-half 2026 revenue W 131,895,033 million, operating profit W 98,152,891 million and profit W 134,268,502 million. Prepared on a consolidated basis under K-IFRS and unaudited. — Q2 2026 (quarter ended 30 June 2026) · publ. 2026-07-29 · source ↗
  6. ReportedSK hynix recorded a loss for the year of ₩9,138bn in 2023.
    SK hynix Inc., Form 424B4 prospectus — consolidated income statements and management's discussion (SEC, CIK 2120882). FY2025: revenue W 97,147bn, cost of sales W 38,456bn, gross profit W 58,691bn, selling and administrative expenses W 5,019bn, research and development W 6,466bn, profit for the year W 42,948bn. FY2024: revenue W 66,193bn, gross profit W 31,828bn, R&D W 4,436bn, profit W 19,797bn. FY2023: revenue W 32,766bn, cost of sales W 33,299bn, a gross loss of W 533bn, an operating loss of W 7,730bn and a loss for the year of W 9,138bn, following a fall in memory prices from the third quarter of 2022. Q1 2026: revenue W 52,576bn, cost of sales W 10,897bn, gross profit W 41,679bn, R&D W 2,451bn, profit W 40,346bn. — FY2023-FY2025 and Q1 2026 · publ. 2026-07-10 · source ↗
  7. Third-party estimateSK hynix's share of DRAM revenue fell from 34.8% for 2025 to 29.1% in the first quarter of 2026.
    SK hynix Inc., semi-annual business report for the six months to 30 June 2026 (SEC Form 6-K, 18 August 2026) — 'The Company determines supply volumes and prices on a monthly and quarterly basis by mutual agreement with major customers, and there is no order backlog based on long term supply contracts.' Total equity W 262,693,228 million at 30 June 2026 against W 120,666,751 million at 31 December 2025; cash and cash equivalents, short-term financial instruments and short-term investment assets W 87,957,923 million against W 34,942,253 million; total borrowings W 18,586,634 million against W 22,247,905 million; debt-to-equity 32.80%, net borrowing ratio not disclosed because it is negative. For the six months to 30 June 2026, revenues of W 17,608,702 million (13.35%) and W 17,187,421 million (13.03%) were derived from external Customers A and B respectively; for the six months to 30 June 2025, W 10,890,639 million (27.31%) came from Customer A. IDC market share: DRAM 29.9% in 2023, 33.4% in 2024, 34.8% in 2025 and 29.1% in Q1 2026; NAND 19.6%, 21.4%, 20.9% and 18.5%. Gartner's world DRAM market: US$78.7bn in 2022 (-15.4%), US$49.9bn in 2023 (-36.5%), US$91.6bn in 2024 (+82.7%) and US$146.9bn in 2025 (+60.0%). Announced investments include approximately W 15 trillion for M15X in Cheongju, approximately W 19 trillion for the P&T7 advanced packaging plant and W 21,608.1 billion for Yongin, against long-term plans of roughly W 600 trillion for the Yongin cluster and W 100 trillion for Cheongju. The company developed the world's first 321-layer QLC NAND. China's State Administration for Market Regulation cleared the Intel NAND acquisition conditionally, obliging the group to maintain a reasonable pricing policy, increase production and support the entry of third-party competitors into the Chinese eSSD market for five years from December 2021. — six months to 30 June 2026 · publ. 2026-08-18 · source ↗
Sources
Generated September 23, 2026