JPMorgan said market concerns over SK Hynix's share decline are overdone, as the chipmaker pulls forward its shareholder return program and maintains HBM competitiveness, which should help improve mid-term sentiment. The key catalysts include the formal announcement of the shareholder return plan by end-September 2026 and an update on HBM contract pricing around the same time. The bank projects cumulative free cash flow of over 800 trillion Korean won over three years, giving SK Hynix ample capacity for shareholder returns; with gains from the sale of its Kioxia stake and other items, its return scale could exceed that of other global memory firms. SK Hynix plans to invest about 54 trillion won in infrastructure, including 35.2 trillion won for a DRAM fab in Yongin and 19.1 trillion won for a NAND fab in Cheongju. On HBM4 pricing reports claiming a 50% discount vs. rivals, JPMorgan said the claims are inaccurate. It expects HBM prices to rise less than 40% year-over-year in 2026, partly due to the company's priority on higher-margin long-term contracts for DDR5, LPDDR5 and NAND, and its multi-year procurement approach with top customer Nvidia. Given annual repricing of HBM, short-term pricing becomes less important after securing 3-5 year contracts.
JPMorgan said Friday that worries over the recent decline in SK Hynix shares are overdone, adding that earlier-than-expected shareholder returns and the company's edge in high-bandwidth memory (HBM) should help lift sentiment in the medium term.
The bank sees key catalysts ahead: SK Hynix is set to formally unveil its shareholder return program before the end of the third quarter of 2026, which lands at end-September. An update on HBM contract pricing is expected around the same time. The chipmaker has pulled the plan forward from "within the year" to the quarter's close.
JPMorgan forecasts cumulative free cash flow of more than 800 trillion Korean won over the next three years, giving SK Hynix ample room for shareholder returns. With proceeds from the sale of its stake in Kioxia and other gains, the bank believes SK Hynix's shareholder return scale could top that of other global memory chip makers.
The company also intends to spend about 54 trillion won on infrastructure, including 35.2 trillion won for the Yongin Y2 DRAM fab and 19.1 trillion won for the Cheongju M17 NAND fab.
On media reports that SK Hynix's HBM4 pricing is 50% lower than rivals, JPMorgan said the claim is inaccurate and the market's fears are excessive. The bank expects SK Hynix's HBM prices to rise less than 40% year over year in 2026, partly because the company needs to prioritize higher-margin long-term supply contracts for DDR5, LPDDR5 and NAND, and because it is handling its relationship with its biggest customer, Nvidia, with a multi-year and long-term procurement view. Since HBM is typically repriced annually, short-term pricing becomes less important once multi-year and 3-to-5-year contract orders are secured.
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