SK hynix shares hit new high on chip shortage

The share price of South Korean semiconductors manufacturer SK hynix hit an all-time high during intraday trading Tuesday in hopes of a first-quarter earnings surprise due to global chip shortage.

At around 9:10 a.m. Tuesday, SK hynix‘s stock price touched 150,500 won ($134), up 5.3 percent from the Friday session’s closing price, bringing its total market capitalization to nearly 110 trillion won. The closing price Tuesday was 144,500 won, up 2.1 percent from Friday and 57 percent on-year.

The rally was mainly attributable to projections that the world will see a supply shortage of dynamic random-access memory chips, setting the stage for a price hike.

Gobbling up the DRAM demand is the introduction of new server platforms and the launch of hyperscale data centers for cloud infrastructure.

Starting the second quarter, the Whitley server platform will be introduced with enhanced memory bandwidth, while global tech giants like Google and Alibaba are ramping up cloud resources, Doh Hyun-woo, an analyst at NH Investment & Securities, wrote in a note.

Moreover, more cryptocurrency mining translates into a higher demand for graphics DRAM, Doh added.

Such demand is projected to push up DRAM’s blended average selling price by 14 percent in the second quarter, according to a report by Kiwoom Securities.

“Earlier-than-expected NAND flash turnaround and the faster-than-market-anticipation pace of the DRAM price surge will become momentum for a further rally,” Kiwoom‘s analyst Pak Yu-ak noted.

Based on the observation, analysts forecast SK hynix’s first-quarter earnings surprise. According to Park, SK hynix’s operating profit in the first quarter will reach 1.3 trillion won, beating the 1.17 trillion-won consensus estimated by market tracker FnGuide.

With chip demand outstripping supply for the time being, semiconductors will continue to become a major pillar of Korea’s export machine.

“Global chip shortages are likely to keep demand for Korea’s largest export, semiconductors, elevated for at least the next few months,” wrote Capital Economics Asia‘s economist Alex Holmes, adding that exports of semiconductors were up over 30 percent on-year in February.

Meanwhile, the Korea Exchange’s main board Kospi, where SK hynix is traded, jumped 1 percent Tuesday as institutional investors here and abroad were net buyers of listed shares. SK hynix is the second-largest stock on the Kospi by market cap, following tech rival Samsung Electronics.

By Son Ji-hyoung (consnow@heraldcorp.com)