SK Hynix Goldman Sachs Conference Call: All customer demands cannot be met, storage prices continue to rise this year

Amid the surge in AI demand and supply bottlenecks, storage chips are fully entering a seller’s market. SK Hynix has explicitly stated that this year, demand from all customers cannot be fully met, and price increases are inevitable.

During the virtual investor meeting held on February 20, SK Hynix revealed the latest developments in the storage market to Goldman Sachs.

Industry-wide shortages: Reordering is useless and will only drive prices higher

SK Hynix provided a very clear outlook on price trends for this year: Driven by strong AI customer demand and limited supply growth, storage prices are expected to continue rising throughout the year.

The core logic behind this is the rigid constraints on supply. SK Hynix pointed out that the entire industry is limited by clean room space, with supply growth physically constrained. Regarding market concerns about “double-booking,” SK Hynix’s view hits the mark:

“The likelihood of meaningful double-booking is very low. Customers are well aware that storage capacity cannot significantly increase in the short term. Therefore, they realize that reordering will not result in more allocations and will only further push up prices.”

Although PC and mobile customers might respond by “despeccing” (reducing configurations), this factor is completely offset by the limited supply growth. As AI customers make substantial progress in service deployment and maintain large investment scales, this “real demand” provides the strongest support for price increases.

Inventories drop to “extremely low levels,” shifting bargaining power to sellers

The current supply-demand tension has reached a high point in recent years. SK Hynix disclosed a key fact during the meeting:

“No customer this year will be able to fully meet their storage needs.”

This means that demand satisfaction rates across all terminal markets are low. From an inventory perspective, server customers’ inventories are at healthy levels, while PC and mobile inventories are declining.

More critically, SK Hynix’s own inventory on the supply side is extremely thin.

“Our inventories of DRAM and NAND are at normal levels, about four weeks, and we expect this level to continue decreasing throughout the year.”

Extremely low inventory levels mean that suppliers’ bargaining leverage is continuously strengthening. Against this backdrop, SK Hynix revealed that it is “discussing multi-year long-term contracts with major customers.” While the company remains cautious, this marks a shift from spot market competition to a focus on securing long-term supply stability.

HBM capacity sold out, shortage of standard DRAM becomes a new bargaining chip

Regarding the market’s most-watched HBM (High Bandwidth Memory), SK Hynix clearly states that capacity allocation for 2026 is already settled.

“All HBM capacity for 2026 has been sold out, and production plans to meet customer demand have been allocated.”

SK Hynix admits that, given the current production plans, it will be difficult to make meaningful adjustments to HBM and standard DRAM production lines in 2026. However, this deadlock could be a positive for the future. Due to the current extreme tightness in supply and demand (Tight S/D) for standard DRAM, SK Hynix has gained more leverage in negotiations. The company believes this “may lead to more favorable terms for HBM business in 2027.”

In terms of process migration, SK Hynix’s focus this year is clear: the M15X fab will mainly increase 1b nm capacity to support HBM3E and HBM4. The more advanced 1c nm process, planned for use in standard DRAM large-scale migration, will be primarily utilized starting in 2027. It is expected that by the end of this year, over half of standard DRAM capacity will adopt 1c nm, while the large-scale adoption of 1c nm for HBM (mainly for HBM4E) will begin from 2027.

Capital expenditure: disciplined approach, focusing on high returns

Despite the huge demand gap, SK Hynix remains disciplined in capital expenditure (Capex).

The company confirmed that Capex this year will exceed last year’s, but emphasized that it will “continue to adhere to Capex discipline.” The investment priorities are very clear: focus on HBM and standard DRAM. For NAND, although some investments have resumed (mainly for migration to 321-layer 3D NAND), its share of total Capex will remain stable (expected to stay in the low double digits percentage), with no reckless expansion.

The full translation of SK Hynix’s Goldman Sachs conference call is as follows:

SK Hynix (000660.KS): Key points from the virtual meeting; tightening memory supply and demand enhances bargaining power and potential upside for HBM

Date: February 20, 2026 | 3:38 PM (KST)

Summary

We held a virtual group investor meeting with SK Hynix (hereafter “Hynix”) on February 20. Main conclusions include:

2. Driven by actual demand and supply tightness, memory prices may continue rising throughout the year.
3. Healthy inventory levels and increasing bargaining power of suppliers are leading to more discussions on long-term contracts.
4. The current tight supply/demand for traditional DRAM could lead to more favorable terms for the 2027 HBM (High Bandwidth Memory) business.
5. The capacity ramp-up for 1c nm process in 2026 will mainly support traditional DRAM, with HBM capacity increasing mainly from 2027.
6. Capex guidance and focus on DRAM/HBM investments are largely in line with Goldman Sachs’ forecasts.

We reaffirm our “Buy” rating on SK Hynix. (For more on our views on the memory industry, see our latest memory report.)

Key Takeaways

1. Driven by actual demand and supply tightness, memory prices may continue rising this year SK Hynix believes that, fueled by strong demand from AI customers, the current upward trend in memory prices could persist throughout the year. The company expects that as AI customers make substantial progress in AI services, they will continue to maintain large investment scales. Although the company acknowledges that potential “despeccing” (reducing configurations) by PC and mobile customers could pressure demand, limited supply growth leads the company to expect prices to stay on an upward trajectory. The company also notes that the industry-wide limited clean room space is a key reason for supply tightness and favorable memory price environment. SK Hynix considers the likelihood of significant “double-booking” (reordering) to be low, as customers realize that short-term capacity cannot significantly increase, and thus reordering will not bring more quotas but will only push prices higher.

2. Healthy inventory levels and increased bargaining power of suppliers are leading to more long-term contract discussions SK Hynix emphasizes that no customer will be able to fully meet their memory needs this year, so demand satisfaction across all terminal markets remains low. As a result, SK Hynix believes server inventories are reaching healthy levels, while PC and mobile inventories are declining. Considering that supplier inventories are also very lean (we believe SK Hynix’s DRAM and NAND inventories are about 4 weeks, expected to decline further throughout the year), we think supplier leverage will continue to strengthen. Against this backdrop, the company is discussing multi-year contracts with major customers. While some progress has been made, SK Hynix remains cautious, aiming to maximize future demand stability.

3. The current tight supply/demand for traditional DRAM could lead to more favorable terms for the 2027 HBM business Although recognizing potential upside in demand, SK Hynix mentions that, given that HBM capacity for 2026 is already sold out and production plans are allocated, it will be difficult to make meaningful adjustments to HBM and traditional DRAM plans in 2026. While the company may stick to the original capacity plan for 2026, we believe that the HBM business in 2027 could have more upside, reflecting the current significant supply/demand tightness in traditional DRAM.

4. The 1c nm capacity ramp-up in 2026 mainly targets traditional DRAM, with HBM capacity starting from 2027 SK Hynix will focus this year on increasing 1b nm DRAM capacity at the M15X fab, mainly to support HBM3E and HBM4. Since the company plans to start using 1c nm process for HBM from HBM4E, the large-scale capacity ramp-up for HBM at this node is expected to be completed by 2027. Meanwhile, due to strong demand for DDR5 and LPDDR5 (including SOCAMM) throughout the year, the company may undertake large-scale technology migrations (rather than adding new wafer capacity) to increase 1c nm bit supply for traditional DRAM. By year-end, over half of traditional DRAM is expected to be produced at the 1c nm node.

5. Capex guidance and focus on DRAM/HBM investments are largely in line with Goldman Sachs’ forecasts SK Hynix mentions that its Capex plans for this year are still under discussion but expects spending to increase compared to last year while maintaining discipline. The wafer fab equipment (WFE) mix is expected to be similar to last year. Although some NAND investments have resumed (mainly for migration to 321-layer 3D NAND), NAND Capex share is expected to remain stable, with a low double-digit percentage of total Capex, focusing mainly on HBM and traditional DRAM. We believe the company’s Capex outlook aligns with ours, as we expect total Capex to grow 36% YoY to 38 trillion KRW, with NAND remaining in the low double digits percentage of total Capex.

Target Price, Risks, and Methodology

Valuation Method: We base our 12-month target price of 1,200,000 KRW on the estimated average P/B ratio for 2026/27. We apply a 30% AI premium, reflecting SK Hynix’s higher valuation relative to Samsung Electronics (SEC) over the past year, due to significant growth in HBM revenue, whereas SEC’s growth was limited. We use the peak multiple of 2.16x during the strongest price increase cycle (2009-2010) to derive a target multiple of 2.8x, which informs our target price.

Main Risks:

2. Severe deterioration in memory supply/demand and delays in technology migration.
3. Weak demand from smartphones, PCs, and servers, impacting overall traditional memory demand.
4. Samsung’s positive progress in HBM could impact SK Hynix’s HBM revenue and profit.
5. Reduced AI-related Capex, which could affect overall HBM demand and thus impact SK Hynix’s HBM revenue/profit.

Chart Data Summary

• Chart 1: We expect the DRAM industry supply/demand gap to widen to 4.9% (shortage) in 2026.
• Chart 2: We expect SK Hynix’s DRAM inventories to further decline from already lean levels (about 3-4 weeks).
• Chart 3: We estimate the NAND industry supply/demand gap to be 4.2% (shortage) in 2026.
• Chart 4: SK Hynix’s NAND inventories are also expected to further decline from lean levels.

Financial Summary (SK Hynix Inc.)

Stock code: 000660.KS Rating: Buy 12-month target: 1,200,000 KRW Current price: 894,000 KRW (as of close on Feb 19, 2026) Upside potential: 34.2% Market cap: 631.2 trillion KRW / $436.6 billion

Key financial forecasts (Goldman Sachs estimates):

Item	2024 (Actual)	2025 (Actual)	2026 (Forecast)	2027 (Forecast)
Revenue (billion KRW)	66,193.0	97,146.7	240,601.9	244,390.2
EBITDA (billion KRW)	36,048.9	61,136.5	185,220.6	172,987.6
EPS (KRW)	28,719	62,161	184,085	169,477
P/E (x)	6.2	5.0	4.9	5.3
P/B (x)	1.7	1.8	2.7	1.8
Dividend yield (%)	1.2	1.0	1.0	2.0
CROCI (%)	21.5	27.7	50.4	39.9

Risks and Disclaimers

Market risks are present; investments should be cautious. This document does not constitute personal investment advice and does not consider individual user’s specific investment goals, financial situation, or needs. Users should consider whether any opinions, views, or conclusions herein are suitable for their particular circumstances. Investment involves risk, and responsibility rests with the investor.