Edgar Cervantes / Android Authority
TL;DR
The AI boom isn’t just causing smartphone prices to increase, it’s also impacting the value of companies that make chips for AI systems. For over 25 years, Samsung was the biggest publicly listed company by market capitalization in South Korea, its home market. However, with the increased demand for AI chips, SK Hynix has now surpassed its market valuation for the first time ever.
According to a Reuters report, South Korean chip manufacturer SK Hynix has overtaken Samsung, with a market capitalization of 2,080.4 trillion won (~$1.35 trillion), compared with Samsung’s 2,066.7 trillion won (~$1.34 trillion), excluding preferred shares.
SK Hynix has had a turbulent history: before being acquired by SK Group, the company nearly went bankrupt and was on the verge of being sold to Micron in 2002. It was also considered a penny stock in 2003, with its shares trading at just 135 won (~$0.088).
The primary factor in SK Hynix’s sudden growth is the increased demand for high-bandwidth memory (HBM) chips. The company is the leading supplier of HBM chips, with its memory being used in AI systems for NVIDIA, Microsoft, and Google. It currently holds a 61% share in the HBM market, compared to Micron’s 21% and Samsung’s 17%.
SK Hynix continued investing in HBM development during a period of low growth in the memory market, and analysts suggest that this investment is why it’s now one of the strongest players in the market.
While memory chips are usually interchangeable, the same isn’t usually true for HBM chips. SK Group chairman Chey Tae-won said:
HBM is different. If SK Hynix’s HBM is replaced with another product, the AI system may not function properly. What used to be a peripheral component has become a core component.
Meanwhile, the company has been steadily increasing its DRAM production capacity as well. That’s still one place where Samsung leads against SK Hynix. However, according to Bank of America’s estimates, SK Hynix is on track to narrow the production gap between itself and Samsung down to 10% by 2028. The company is already expected to produce nearly 589,000 DRAM wafers this year, compared to 691,000 wafers from Samsung.
In a statement to Reuters, Samsung said that its market cap should be calculated including preferred shares. With those shares included, the company’s market value would stand at 2,246.4 trillion won (~$1.46 trillion).
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