Positive assessments of SK Hynix are expanding, driven by growing demand for AI semiconductors. Optimistic outlooks have emerged, anticipating improved operating performance and expanded investment capacity.

S&P announced on the 14th that it adjusted SK Hynix's rating outlook from negative to stable and maintained its 'BBB-' issuer credit rating and senior unsecured bond rating.

S&P projected that, given SK Hynix’s leading position in the high-bandwidth memory market, significant improvements in operating performance will be realized over the next 6 to 18 months, driven by the rapid expansion of demand for generative AI memory semiconductors, including HBM3.

Although SK Hynix faltered this year by recording a loss in the NAND flash memory sector, it was assessed that improvements in profitability and credit indicators would be realized, driven by increased supply and demand for high-priced high-bandwidth memory such as HBM, expanded DRAM market share, and a rebound in the memory market cycle.

SK Hynix is expected to be the biggest beneficiary of the rapid increase in demand over the next 12 to 18 months, given its current market position and production capacity, and is known to be the exclusive supplier of HBM3 chips to Nvidia.

S&P analyzed that the share of HBM within DRAM is currently around 10–15%, and is projected to increase by approximately 30% in 2024, with an expected increase in DDR5 memory sales, which is positive for improving DRAM margins.

With the increase in sales of these high-value products, EBITDA is estimated to increase significantly from approximately 6 trillion won in 2023 to approximately 21 trillion won in 2024, and the EBITDA margin is also expected to improve from 18% to 42%.

SK Hynix invested 8 trillion won in capital expenditures in 2023, and it is estimated that capital expenditures will increase further to 14 trillion won in 2024. This is attributed to the expansion of HBM capacity, for which pre-orders have been secured up to 2024 volume.

It was assessed that cash flow is also smooth, and despite the expansion of capital investment, sufficient funds for investment can be secured by utilizing operating cash flow and the forecast of turning a profit in 2024.

However, the loss-making NAND business unit and the economic slowdown are cited as downside risk factors. SK Hynix's NAND flash division continues to record losses, and its future recovery is expected to be slower than that of the DRAM market. On the positive side, the margin of loss is narrowing.

In addition, weak consumer demand resulting from the economic slowdown may act as a factor hindering business recovery due to longer replacement cycles and reduced consumer sentiment.