SK Hynix shares hit all-time high after Microsoft contract

Shares of SK Hynix, a supplier of dynamic RAM and semiconductors, rose by 8.7% at the end of trading on the Korea Exchange on January 27, reaching an all-time high. This is how investors, among other things, reacted to reports that the company is the only supplier of advanced memory for the new chip of artificial intelligence from Microsoft, writes Bloomberg.

Korean business newspaper Maeil Business Newspaper, citing its sources in the industry and brokerage companies, in the morning of January 27 reported that SK Hynix has signed an exclusive contract with Microsoft to supply the American company with blocks of dynamic RAM. According to interlocutors of the publication, "each of the Maia 200 processors presented by Microsoft this week will use six blocks of memory HBM3E from SK Hynix". SK Hynix did not comment on this information, citing the fact that they can neither confirm nor deny information related to customers, writes Bloomberg.

The agreement between Skynix and Microsoft refers to the Maia 200 chip, which Microsoft unveiled on January 26. The company called this processor the "centerpiece" of Microsoft's new strategy to improve the efficiency of the company's services. Microsoft expects that Maia 200 will compete with Nvidia products on the market. The American corporation created the chip together with Taiwan Semiconductor Manufacturing, years after Amazon and Google began developing their own similar chips, Bloomberg writes.

The announcement of the Skynix and Microsoft agreement comes ahead of SK Hynix publishing its quarterly earnings on Jan. 29.

"The rise in SK Hynix shares on Tuesday was supported by buying on the downturn and expectations of higher [company] earnings from HBM memory sales," Fibonacci Asset Management Global CEO Jung In Yoon told Bloomberg. He added: "We are likely to see SK Hynix's profit again within expectations."

Another positive factor in the growth of SK Hynix shares on January 27 was the increase in Citigroup target price of the company's securities by 56%. The bank's analysts also maintained their recommendation to buy SK Hynix securities. In the note Citigroup noted that "the memory market is shifting to semi-customization, when customers, making an order for memory, have to sign a contract a year before the actual delivery of products".

Analysts at Morninstar and JPMorgan said they estimate the current "supercycle" in the memory market will continue through 2027, Reuters wrote.

This article was AI-translated and verified by a human editor