⚠ The Specialty Share Is the Only Thing Holding the MultipleHigh threat
SK hynix (SKHY) — threat to the moat
Strip out high-bandwidth memory and what remains is a cyclical commodity producer trading at a cyclical commodity multiple.
Consider SK hynix without HBM. It would be the second-largest producer of a standardised product in a three-player market, with violently cyclical returns, a loss as recently as 2023, and no ability to price above the market. That business is worth a low multiple of mid-cycle earnings, and the market has historically paid exactly that — the shares changed hands at under 2× earnings at the 2018 peak.
Essentially the whole re-rating rests on HBM being different in kind rather than in degree. If HBM converges toward being another memory product — three adequate suppliers, standardised, allocated on price — then the appropriate multiple converges too, regardless of how large the revenue has become.
The evidence is currently mixed and the trend is unhelpful: share down to 56.4%1 while two competitors invest heavily to close the remaining gap.
The counterweight is that HBM's difficulty is manufacturing rather than design, and manufacturing gaps close slowly.
The falsifier is the price spread between HBM and standard DRAM. Convergence there is the market telling you the specialty has become a commodity, and it will show up in the spread long before it shows up in the share.
- Third-party estimateHBM share of 56.4% 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 ↗