SK Hynix celebrates blockbuster US stock market debut, raising $26.5 billion

The boom is driven by growing demand for memory chips for applications related to artificial intelligence. Chatbots like ChatGPT, image generators and other AI applications require not only computing power — for which Nvidia chips are particularly in demand — but also enormous amounts of memory. Most AI applications use a special type of memory called High Bandwidth Memory (HBM), which differs from conventional working memory in computers and smartphones.

Memory chip boom drives prices

SK Hynix is one of the three largest memory chip manufacturers in the world alongside Samsung and US company Micron. Together, the three companies control around 90 percent of the market for DRAM modules, which are installed in PCs and most other devices. The shortage has caused prices to rise sharply: PC memory modules currently cost around five times as much as a year ago.

The high demand is also reflected in the industry's balance sheets. On Tuesday, Samsung reported a record quarterly profit of 89.4 trillion won, equivalent to around 51.6 billion euros, for the past quarter. It was already the third record quarter in a row. Nevertheless, Samsung's share price fell after the release of the preliminary figures, because investors apparently had even higher expectations. SK Hynix shares had also risen to a record high of just under three million South Korean won at the end of June.

Bottlenecks until at least 2027

Industry experts expect the supply bottlenecks to persist for some time to come. Micron chief Sanjay Mehrotra said at the end of June that bottlenecks should be expected until at least the end of 2027. SK Hynix itself had already stated in March that the chip shortage could extend until 2030. A slow recovery in supply is not expected before 2028, and it is unclear whether demand will then be fully met.

The shortage also has consequences for consumers. Consoles from other major manufacturers became noticeably more expensive last year; Microsoft raised prices for its Xbox console shortly before Apple did. Apple announced higher prices for its laptops at the end of June. Shawn DuBravac, chief economist of the Global Electronics Association, said: "Früher hätte man solche kleinen Schwankungen vielleicht noch aussitzen können. Ich glaube nicht, dass das hier der Fall ist. Abwarten ist derzeit keine Strategie und wird es wahrscheinlich auch in absehbarer Zukunft nicht sein".

Class action lawsuit and billion-dollar investments

At the same time, the three market leaders are coming under legal pressure. A class action lawsuit has been filed in the US against Samsung, SK Hynix and Micron, accusing the manufacturers of price-fixing and artificial scarcity. The lawsuit alleges that the companies have raised DRAM prices sevenfold over the past few years.

South Korean President Lee Jae Myung had temporarily criticized demands from some semiconductor unions as "überzogen". Members of the Samsung union accepted a compromise proposal from company management at the end of May after strike threats, which provides for annual bonuses of several hundred thousand euros per employee in the highly profitable semiconductor division. Unemployment in South Korea has recently risen significantly, particularly among the under-30 age group.

Meanwhile, Micron announced on Thursday that it would invest around $250 billion, equivalent to approximately 220 billion euros, in expanding production capacity. The company aims to strengthen its position in the DRAM and HBM market over the long term and reduce the tech industry's dependence on the few major manufacturers.