At the JP Morgan conference in South Korea, SK Hynix: The memory upcycle is expected to last longer than anticipated

According to the Wind Trading Platform, JP Morgan released a research report on March 8, 2026, documenting the core statements made by SK Hynix's management at the JP Morgan Korea Conference. JP Morgan maintains an overweight rating on SK Hynix, with a target price of 1.25 million Korean won, implying about a 35% upside from the current stock price (926,000 Korean won).

For investors, the conference conveyed the following key signals:

• The duration of the memory upcycle will exceed market expectations, with severe supply-demand gaps on both the DRAM and NAND sides;
• The HBM business maintains a strong leadership position, with the HBM4 mass production timeline unchanged and profitability targets remaining on par with last year;
• Leading manufacturers are shifting their strategic focus to "factory-first," with a capital expenditure plan of approximately 22 trillion Korean won demonstrating a long-term commitment to expansion;
• The intensity of shareholder returns has increased, with the company announcing a special dividend of 1 trillion Korean won and a stock buyback plan in January 2026, sending positive signals.

Duration of the Upcycle Will Exceed Expectations

SK Hynix's management systematically elaborated on multiple driving factors that suggest the memory upcycle is likely to last longer during the conference:

1. The rise of customized memory solutions: Customized products represented by HBM (High Bandwidth Memory) are reshaping the memory market landscape;
2. Changes in wafer and supply economics brought by HBM: Due to the concept of "wafer-to-die penalty," HBM consumes a larger proportion of capacity;
3. AI inference demand extending to traditional DRAM/NAND: The expansion of AI application scenarios is extending memory demand from high-end HBM to conventional DRAM and NAND.

On the supply-demand front, management clearly stated that both DRAM and NAND are facing severe supply-demand gaps, and the upward price trend is expected to continue in the foreseeable future. Currently, the inventory levels of suppliers and channel customers are below average, with shipment bit growth roughly in line with production bit growth.

Investors Highly Focused on Long-Term Agreements (LTA) and Cycle Sustainability

At this conference, investors showed strong interest in long-term supply agreements (LTA) and cycle sustainability. Management characterized the current memory industry as being in a business model transformation phase and views maintaining the memory upcycle as a top strategic priority.

Regarding the LTA framework, management emphasized:

• More binding bilateral agreements are crucial for enhancing revenue and cash flow visibility;
• Key considerations include locking in supply volumes and price ranges to ensure the predictability of supply contracts;
• LTAs are typically multi-year agreements (over three years);
• JP Morgan assesses that SK Hynix is adopting a more balanced LTA strategy, seeking equilibrium between B2B and B2C customer structures while maintaining a relatively conservative pricing strategy

HBM's Leading Position Remains Solid, Capital Returns More Aggressive

SK Hynix reiterated its overall HBM business plan for this year, with the HBM4 mass production ramp-up schedule remaining unchanged (JP Morgan expects HBM4 bit shipments to cross over in the third quarter of 2026).

The company shows strong confidence in maintaining its leadership position in the HBM business, primarily relying on: deep collaboration with ecosystem partners, including cooperation with a leading foundry in logic chip design and manufacturing; clear visibility of the technology roadmap.

In terms of pricing, SK Hynix reiterated that HBM bit shipments and pricing are negotiated annually, aiming to maintain profitability levels similar to last year. Despite a significant rebound in D5/LPD5 prices since the fourth quarter of 2025, the company believes there is almost no possibility of renegotiating contracts in 2026.

Additionally, SK Hynix has demonstrated a more aggressive stance on shareholder returns. After establishing the primary goal of achieving a net cash position, the company retains the flexibility to allocate additional shareholder returns in advance. This undoubtedly sends a strong positive signal—management is confident in the strength and duration of this memory cycle, with clearer cash flow visibility than in previous cycles.

DRAM Capacity Planning: Factory Priority Strategy, Yongin Base Phased Advancement

SK Hynix further disclosed the strategic logic behind its approximately 22 trillion KRW infrastructure capital expenditure plan, centered on the "fab first" strategy.

Specific plans are as follows:

• The mass production schedule for Phase 1 of the Yongin Plant has been advanced by three months, with the company focusing on infrastructure construction and cleanroom facilities to ensure flexibility in capacity expansion;
• The remaining phases 2 to 6 of the Yongin Plant will be gradually ready between 2028 and 2030;
• The design capacity of the Yongin Plant disclosed by management is higher than JP Morgan's previous estimate of 270,000 to 350,000 wafers per month (WSPM), and the actual capacity construction scale may vary due to storage building design and the deployment schedule of the 1dnm process.

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