Giddy profit growth at a low PE multiple

Research evidence excerpt

Giddy profit growth at a low PE multiple

Macquarie Equity Research SK Hynix

No easing of supply constraints even after new fabs come online from 2027

• AI build-out frenzy should support the memory market beyond 2027. There now seems

to be a consensus that the memory crunch will continue for at least another year or so.

The key issue then becomes what impacts the new fabs coming onstream from 2027 will

have on memory demand-supply. However, we expect DRAM bit supply growth to remain at

around 20% in 2028, even after new fabs become operational, as bit growth from the 1d/0a

nm node migration should be limited by longer tact times (lead times) and larger cleanroom

requirements. Moreover, HBM4E and HBM5 should consume significantly more DRAM wafer

capacity.

• Memory demand from PC and smartphone should come back in 2028, if not 2027.

Consumer segments are in the middle of reflecting higher memory costs in their product

prices this year. So far, end demand has been relatively resilient, indicating low demand

elasticity to price. In other words, memory is essential to all digital devices, which have

become a necessity in modern life. As long as the memory shortage persists, a 30-50%

higher retail selling price for PCs and mobile phones, should become the new norm. With

edge AI usage taking off, we expect memory demand from consumer devices to jump in

terms of both unit shipment growth and memory contents per box from 2028.

• HBM annual price to rise significantly in 2027E. When the 2026 HBM annual price was

set in October 2025, the commodity DRAM price was only a fraction of the current price.

Although HBM4 is far more technologically complex, HBM profit margins remain significantly

below those of commodity DRAM. Now that even the NAND profit margin is rapidly