SK Hynix overtakes Samsung to become South Korea's most valuable company

SK Hynix on Monday overtook Samsung Electronics to become South Korea's most valuable listed company, marking a dramatic reversal of fortunes for a chipmaker that two decades ago nearly collapsed under debt.

The company, now the dominant supplier of high-bandwidth memory (HBM) chips used in AI systems for customers such as Nvidia and Alphabet's Google, has emerged as one of the biggest beneficiaries of the global AI boom, propelling a more than 340% rally in its shares this year and lifting its market value above both Samsung Electronics and Micron.

Shares of SK Hynix, now the world's most valuable memory chipmaker, traded up 5.7% to bring the company's market capitalisation to 2,082.5 trillion won ($1.35 trillion) as of 0347 GMT, compared with gains of 0.4% in Samsung Electronics to 2,081.3 trillion won, excluding preferred shares.

The stock ‌hit the milestone as AI ⁠reshapes the ⁠global semiconductor industry, elevating specialised memory chips from commonly traded commodities into critical components of the infrastructure powering applications such as ChatGPT and advanced AI models.

SK Hynix focuses primarily on memory chips, whereas Samsung Electronics also manufactures logic chips and consumer electronics such as smartphones and TVs.

Samsung Electronics had held the top spot since 2000.

"The emergence of customised AI memory fundamentally changed the industry's economics and allowed SK Hynix to establish itself as the market leader," said Kim Sunwoo, a senior analyst at Meritz Securities.

Samsung said in a statement that any calculation of its market capitalisation should include preferred shares, which would bring the value to around 2,252 trillion won.

SK Hynix's soaring share price marks the culmination of one of the biggest turnarounds in South Korea's corporate history.

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

The deal ⁠eventually fell through, ‌leaving the company under creditor control for nearly a decade.

Its shares plunged as low as 135 won in 2003, leaving it viewed as a penny stock, or "Dongjeon-ju" in Korean.

Its fortunes in the years since tracked the global memory industry's traditional boom-and-bust cycle.

In 2023, a severe downturn battered memory prices, pushing SK ⁠Hynix to report an annual operating loss of 7.73 trillion won.

It started recovering a year later as the AI boom gained momentum and the likes of Microsoft, Google and Meta invested heavily, pushing it to report an annual operating profit of 23.5 trillion won in 2024, a record at the time.

TURNAROUNDAnalysts attribute SK Hynix's central role in the global AI ecosystem to its decision to continue investing in HBM, a specialised memory chip stacked vertically to deliver faster performance and lower power consumption, during a downturn in the memory industry.

Unlike conventional memory products, HBM chips are tightly integrated with AI processors, creating significantly higher barriers to entry and giving suppliers greater pricing power.

By 2025, SK Hynix captured 61% of the global HBM market, far ahead of Samsung Electronics' 17% and Micron's 21%.

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

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

"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 said.

"In the past, it did not matter whether memory came from Hynix, Samsung or Micron. ⁠They were interchangeable commodity products.

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," Chey said.

Analysts say that Samsung's position as the world's largest DRAM producer could also be under threat by SK Hynix.

Bank of America estimates that SK Hynix's monthly DRAM output will reach about 589,000 wafers this year, compared with roughly 691,000 wafers for Samsung Electronics.

However, SK Hynix is likely to expand DRAM output by about 38% between 2025 and 2028, compared with about 17.5% growth at its rival.

That would narrow SK Hynix's production gap to less than 10% by 2028 from about 23% in 2025, which would be a particularly significant achievement because of Samsung's larger manufacturing scale.

"Previously, the difference in manufacturing scale meant there was simply no way for rivals to close the profitability gap with Samsung," said Kim.

Reuters has reported that SK Hynix is opting to choose the Nasdaq for its planned U.S. listing, which would broaden the company's investor base and raise its profile further among global investors.

($1 = 1,538.7300 won) ...