Kasikorn Securities has released an analysis on SK Hynix’s 2Q26 earnings as profits fell short of expectations, pressured by product mix issues despite strong AI investment demand.
The key highlight is a reported profit of KRW 94 trillion, largely from a one-off gain—SK Hynix’s divestment of its investment in Kioxia, originally made through Bain Capital in 2018. Core operating profit reached KRW 60.5 trillion, up 557% YoY and 61% QoQ, but still 6% lower than market consensus due to revenues coming in 5% below expectations, though still up 257% YoY.
The main reason for this miss is weaker-than-expected growth in the DRAM segment, which was about 9% lower than the market forecast. ASP (average selling price) increased 30% QoQ, short of the expected 41%, due to long-term agreements and a higher proportion of HBM products. While SK Hynix holds the highest market share in HBM, its margin is lower than that of commodity DDR products. Meanwhile, NAND revenue surpassed forecasts by 5%, soaring 353% YoY, thanks to 15% Bit Shipment growth and a 57% QoQ ASP increase due to a severe eSSD shortage. However, GPM (gross profit margin) was still 1% below market expectations at 83.2%.
Looking ahead to 3Q26, SK Hynix expects Bit Shipment growth for DRAM and NAND at 10% and 3% QoQ, respectively, due to ongoing supply constraints. Prices are likely to be supported by the growing mix of HBM4 and 1c-nm DRAM products in 2H26.
For 2026, SK Hynix’s CAPEX target is KRW 40 trillion, focusing on accelerating the construction of its M15X and Yongin Fab1 manufacturing facilities and continuing the NAND node migration toward higher performance. The company also plans to expand its NAND portfolio to cover high-performance TLC eSSD, high-capacity QLC eSSD, and high-performance SLC-mode SSDs to meet varied client needs.
Kasikorn Securities maintains a cautious view on the memory sector, highlighting that GPM increases may not be sustainable. If margins can’t continue rising, there will be a risk for a broader sector sell-off, even as SK Hynix, with its high HBM exposure, could see its GPM decline at a slower pace than its peers.
