South Korean chipmaker SK Hynix has joined the prestigious $1 trillion market value club, marking a significant milestone in the global semiconductor industry. This achievement comes as the company experiences a surge in demand for high-end memory chips used in artificial intelligence (AI) applications.
AI Demand Drives Growth
SK Hynix’s market value soared to a record 1,680 trillion won ($1.12 trillion) after its shares jumped by nearly 15%. This growth has been fueled by the increasing need for memory chips in AI chipsets, such as those designed by Nvidia. The demand has tightened supply and driven up prices, benefiting major semiconductor manufacturers.
In the first quarter of the year, memory chip prices doubled, and they are expected to rise by up to 63% in the current quarter. This trend is attributed to the AI data center demand, which has constrained supplies for other sectors like smartphones, laptops, and automobiles. As a result, top memory chipmakers have reported record profits.
Market Impact and Future Outlook
SK Hynix is now one of only three Asian companies, alongside Samsung and TSMC, to reach the $1 trillion market value. South Korea has become the first country outside the United States to have more than one company achieve this milestone. The KOSPI index, South Korea’s benchmark stock index, has also reached a record high, driven by the performance of SK Hynix and Samsung, which together account for half of the index’s market capitalization.
Analysts, such as Kim Young-gun from Mirae Asset Securities, predict that memory chip demand will continue to exceed supply until 2028, keeping prices elevated. This optimistic outlook has led to increased target prices for SK Hynix and Samsung shares.
Investor Interest and ETF Growth
Investor interest in the semiconductor sector has been robust, with U.S. retail investors pouring billions into a new exchange-traded fund (ETF) that offers exposure to SK Hynix and Samsung. The first South Korean single-stock leveraged ETFs linked to these companies saw significant gains on their debut, reflecting the strong market sentiment.
The Korea Financial Investment Association’s website experienced high traffic as investors rushed to access online courses required for investing in leveraged ETFs, highlighting the growing enthusiasm for semiconductor stocks.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
