⚠ Yield Learning Transfers With PeopleModerate threat

SK hynix (SKHY) — threat to the moat

Process knowledge held in engineers is held by people who can be recruited, and two of the world's three DRAM makers hire from the same universities.

A manufacturing advantage held as process knowledge has a specific vulnerability: it is held by people. Semiconductor process engineers move between firms, and the entire industry is concentrated in a small number of places where they can move without moving house.

How process knowledge movesHeld inRecipes, tuning, thousands of experimentsHeld byHundreds of specialists, not a document2 of the 3 DRAM makersKorean, hiring from the same universitiesThe tellA rival's yields improving in a step, not a slopeA 12-high stack has one recipe and hundreds of specialists. Poaching buys direction.
The advantage is institutional, which is why poaching buys direction not capability.

Korea's memory industry is unusually exposed to this. Two of the world's three DRAM makers are Korean, headquartered within driving distance of each other, hiring from the same universities. Legal protections on trade secrets exist and are enforced — the industry has produced prosecutions — and they do not prevent an engineer from knowing what they know.

The counterweight is that modern process knowledge is genuinely institutional rather than individual. No single person carries a working HBM recipe; it is distributed across hundreds of specialists and thousands of documented experiments, funded by a research budget that rose to ₩6,466 billion in 2025 from ₩4,436 billion the year before1, and hiring a few of them buys direction rather than capability.

The signal to watch is a competitor's yield trajectory improving discontinuously rather than gradually. Gradual improvement is learning; a step change usually means something was acquired.

References
  1. ReportedResearch and development expenses of ₩6,466bn in 2025, from ₩4,436bn in 2024.
    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 ↗
Sources
Generated September 23, 2026