How SK Hynix Overcame Debt to Beat Samsung in Market Value

Two decades ago, South Korea’s SK Hynix was reeling through a debt crisis that left the company nearly bankrupt. In May, it entered the trillion-dollar club, matching the world's largest technology giants.

That milestone set the stage for SK Hynix claiming the ultimate throne in chipmaking, overtaking arch rival Samsung Electronics in total market value. 

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

Behind the company’s path to success is its early dominance as the primary high-bandwidth memory (HBM) supplier for global technology giants. These chips are increasingly being used in AI systems for customers such as NVIDIA and Alphabet’s Google in a trend reshaping priorities across data centres and cloud providers.

Gen AI boom’s biggest beneficiary

In 2002, what was 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 (US$0.09) in 2003, leaving it 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, pushing SK Hynix to report an annual operating loss of 7.73tn won (US$5.02bn). It started recovering a year later as the gen AI boom gathered momentum and the likes of Microsoft, Google and Meta invested heavily. This pushed the company to report an annual operating profit of 23.5tn won (US$15.26bn) in 2024, which was a record at the time.

Analysts attribute the central role of SK Hynix in the global gen AI ecosystem to its decision to continue investing in HBM during a downturn in the memory industry. 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, 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 the 17% held by Samsung Electronics and the 21% of Micron.

Suwhan Kim, Senior Analyst at Meritz Securities, tells Reuters: “The emergence of customised AI memory fundamentally changed the industry’s economics and allowed SK Hynix to establish itself as the market leader.”

HBM investment pays off 

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.

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

He wrote: “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.”

Meanwhile, 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. 

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

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