Contrarian to Korean Brokerages! SemiAnalysis: Forecasts Strong Profits for SK Hynix, "Be Greedy When Others Are Fearful"!

Semiconductor research firm SemiAnalysis released a bullish report, directly countering the market panic triggered by Korean local brokerage KIS's earlier downgrade of SK Hynix's earnings forecast. It maintains that SK Hynix's DRAM performance outlook remains robust and characterizes the current adjustment as an entry opportunity.

In a report titled "Be Greedy When Others Are Fearful," SemiAnalysis analyst Ray Wang predicted that SK Hynix's comprehensive DRAM average selling price (ASP) in the second quarter of 2026 will rise approximately 45% quarter-on-quarter, with operating profits from the DRAM segment reaching 55 trillion South Korean won. The report explicitly stated that despite recent volatility in the memory sector raising investor concerns, SK Hynix and other leading memory companies "remain among the most attractive risk-reward opportunities in the semiconductor industry."

KIS Downgrade Triggers Sell-off, but Emphasizes No Deterioration in Fundamentals

The trigger for this round of volatility was the Q2 earnings forecast report for SK Hynix released by Korean local brokerage KIS on July 13.

KIS forecasted SK Hynix's Q2 revenue at 80.9 trillion South Korean won, a 54% increase quarter-on-quarter and a 264% surge year-on-year; operating profit was projected at 60.4 trillion South Korean won, up 61% quarter-on-quarter and 556% year-on-year. While these figures are impressive, the issue lies in the fact that the market consensus expectation was 65 trillion South Korean won. KIS's forecast was approximately 8% below consensus, effectively declaring that "expectations were too high."

Following the news, SK Hynix's stock price quickly dropped more than 10%, falling below the 2 million South Korean won mark, representing a 33% pullback from its historical high on June 25.

KIS explained the core reason for profits falling short of consensus in its report: SK Hynix has a high proportion of HBM revenue, and HBM prices are typically locked in via long-term agreements (LTAs). These contract prices are relatively fixed and cannot be significantly raised in the short term to match spot market trends. In contrast, standard DRAM and NAND spot prices have higher elasticity, resulting in larger ASP increases during overall market price hike cycles. KIS predicted that Q2 DRAM average prices would rise about 30% quarter-on-quarter and NAND about 50%, but SK Hynix's overall ASP growth was "dragged down" by HBM contract prices.

KIS simultaneously lowered its operating profit forecasts for 2026 and 2027 by approximately 9% and 11%, respectively, compared to previous estimates. However, the brokerage clearly stated that this downgrade was "a correction after incorporating the assumptions of signed LTA prices into the calculations, not a concern about performance," while maintaining its target price of 3.8 million South Korean won and an "Overweight" rating.

SemiAnalysis Clashes Directly: 55 Trillion Profit, Spot Price Hikes are the Core Driver

SemiAnalysis's report directly refuted the aforementioned pessimistic sentiment.

The firm pointed out that despite adjustments to pricing methodologies and noting recent market noise, its positive judgment on SK Hynix's 2Q26 DRAM performance "remains unchanged." Its core forecast is: DRAM comprehensive ASP to increase approximately 45% quarter-on-quarter, with operating profits from the DRAM segment reaching about 55 trillion South Korean won.

SemiAnalysis believes that the approximately 60% quarter-on-quarter increase in DRAM spot prices— is sufficient to support a significant upward trajectory in SK Hynix's overall profitability. The low single-digit quarterly changes in HBM prices are also stable and do not constitute a drag.

SemiAnalysis also emphasized that SK Hynix and other leading memory companies currently offer the "best risk-reward ratio" investment opportunities in the semiconductor industry, especially after undergoing a period of adjustment.

Divergence in Long-term Logic: Single-Quarter ASP Elasticity vs. Profit Sustainability?

Although the two reports differ on short-term figures, their positions on medium-to-long-term fundamentals are not entirely opposed.

KIS is also not pessimistic in its report. The brokerage expects the operating profit margin in 2Q26 to reach 74.6%, a historical high, with continuous improvement in subsequent quarters. KIS believes that as the memory industry shifts towards a 3-to-5-year LTA contract structure, the core driver of valuation will shift from "single-quarter ASP increases" to "how long high profitability can be sustained." The expansion of LTAs is reducing the long-standing performance volatility in the memory industry.

SemiAnalysis, meanwhile, more directly characterizes the current adjustment as a buying opportunity, viewing SK Hynix as the option with the best risk-reward ratio in the semiconductor sector at this stage.