SK Hynix Overtakes Samsung in Market Value

A South Korean chipmaker nearly collapsed under debt 20 years ago. Today it has overtaken Samsung Electronics to become the world's most valuable memory chip company.

SK Hynix shares closed up 5.6% on Monday 22 June, lifting its market capitalisation to 2,080.4tn won (US$1.35tn). Samsung's stock eased 0.14% to give it a market value of 2,066.7tn won (US$1.34tn), excluding preferred shares.

The shift in market position came weeks after SK Hynix entered the trillion-dollar club in May. The company now matches the valuation of the world's largest technology corporations.

The turnaround could mark one of the most dramatic corporate recoveries in the global semiconductor industry. SK Hynix was on the verge of bankruptcy in 2002.

Early supplier strategy pays off

SK Hynix secured its position as the primary high-bandwidth memory supplier for global technology companies. These chips are increasingly being used in AI systems for customers such as NVIDIA and Alphabet's Google.

The demand for HBM technology has reshaped priorities across data centres and cloud providers. SK Hynix captured 61% of the global HBM market by 2025, according to industry data.

Samsung Electronics held 17% of the market, while Micron controlled 21%.

The competitive advantage stems from a decision to continue investing in HBM during a downturn in the memory industry, with analysts attributing the company's growth to this strategy.

From bankruptcy to record profits

In 2002, what was then Hynix Semiconductor was on the verge of being sold to Micron. The company had been crippled by debt accumulated during an aggressive expansion drive.

The deal eventually fell through. The company remained under creditor control for nearly a decade.

Shares plunged as low as 135 won (US$0.09) in 2003. The stock was viewed as a penny stock, or 'Dongjeon-ju' in Korean, which translates to a small-value coin.

In 2023, a severe downturn battered memory prices. SK Hynix reported an annual operating loss of 7.73tn won (US$5.02bn).

The company started recovering a year later as the gen AI boom gathered momentum. Microsoft, Google and Meta invested heavily in AI infrastructure.

SK Hynix reported an annual operating profit of 23.5tn won (US$15.26bn) in 2024. This was a record at the time.

Product differentiation drives pricing power

HBM is a specialised memory chip stacked vertically to deliver faster performance and lower power consumption. Unlike conventional memory products, HBM chips are tightly integrated with gen AI processors.

This creates significantly higher barriers to entry. Suppliers gain greater pricing power.

SK Hynix was founded in 1983 as a unit of Hyundai. The company was later spun off and purchased by SK Group, the family-run chaebol conglomerate whose businesses span telecoms to energy.

Chey Tae-won, Chairman at SK Group, faced strong opposition to the deal at the time. He explains his thinking in a book published in January.

He writes: "What I really wanted to accomplish when we acquired Hynix was to transform it from a commodity memory producer into a mainstream semiconductor company whose products are indispensable."

Chey notes that, in the past, it did not matter whether memory came from Hynix, Samsung Electronics or Micron because they were interchangeable commodity products.

He says: "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."

Production capacity expansion continues

Samsung Electronics faces a growing threat to its position as the world's largest DRAM producer. Analysts say its long-standing manufacturing dominance will soon be directly challenged by SK Hynix.

According to Bank of America, the monthly DRAM output of SK Hynix will reach about 589,000 wafers this year. Samsung Electronics is projected to produce roughly 691,000 wafers.

According to Reuters, SK Hynix is choosing Nasdaq for its planned US listing. The move would broaden the investor base of the company and raise its profile further among global investors.