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UBS: “SK Hynix ADR Is Undervalued”… Sees 61% Upside
By Seong Ju-won
Published July 31, 2026 – 3:55 a.m.
ADR down 33% from its July 14 peak and now trading below its IPO price
Global investment bank UBS issued a client note on July 30 (U.S. time) recommending a “Buy” rating on SK Hynix’s American Depositary Receipts (ADRs) with a price target of $204.
According to CNBC, this represents 61% upside from the previous closing price of $126.79.
“The market is underestimating the structural improvement in memory profitability”
UBS analyst Nicholas Gaudois said:
“At the current valuation, SK Hynix’s share price does not fully reflect the structurally higher profitability of the memory industry.”
According to Investing.com, SK Hynix’s ADR has fallen 33% from its July 14 high and is now trading 13% below its IPO price of $149.
UBS believes the current share price reflects a 17.7% average return on equity (ROE)—the historical average from 2012, after the DRAM industry restructuring, through 2022, before the AI boom.
However, UBS forecasts an average ROE of 40.2% between 2027 and 2031, suggesting a significant gap between market expectations and the company’s long-term earnings potential.
AI-driven memory demand expected to accelerate
UBS believes the rapid adoption of agentic AI will fundamentally transform the memory industry and drive stronger demand through 2027.
It forecasts memory bit demand growth to accelerate as follows:
DRAM: from 22% in 2026 to 36% in 2027
NAND: from 20% in 2026 to 23% in 2027
According to UBS, the current stock price still does not fully reflect:
structurally higher profitability,
stronger free cash flow generation,
and increased shareholder returns.
Second-quarter results and HBM4 negotiations in focus
UBS also noted that long-term supply agreement (LTA) renegotiations are progressing faster than expected.
So far:
10 agreements have already been signed,
with additional negotiations still underway.
While these contracts may limit short-term price increases, UBS believes they will improve profit margins over the longer term.
During the second quarter:
DRAM average selling prices (ASP) rose 30% quarter-over-quarter.
However, the increase was partly limited by:
a higher share of mobile memory products,
and the fact that HBM4 shipments only began toward the end of the quarter.
UBS also reported that SK Hynix’s management raised its annual capital expenditure (CAPEX) guidance to the high-40 trillion won range.
For its valuation of the Korea-listed shares, UBS applies a 12-month forward price-to-book (P/B) ratio of 3.65x.
HBM expansion expected to support long-term growth
According to CNBC, SK Hynix is making progress in negotiations for 2027 HBM supply contracts while continuing to expand production capacity.
UBS believes these developments should support both profit margins and long-term growth, reinforcing its positive outlook on the company.

Key supplier of NAND memory to Sandisk reports their earnings tomorrow.

They smashed last earnings report so much that Japanese were waiting in line to buy more of their stock.

During this downturn they crashed more than 70% in the last month.

I think today, after this huge downturn and some hope finally showing, is good time to start building your position

Semiconductors Alone Drive Samsung’s Results: Countering Chinese Competition and Turning Around the DX Division Are Now the Company’s Key Challenges
By Kim Geon-ho
Published: July 30, 2026, 7:02 PM
Record Operating Profit of KRW 89.5 Trillion in the Second Quarter
Recovery in the System LSI and Foundry businesses
DX posts its first-ever operating loss (KRW 800 billion)
Facing competition from China’s CXMT, Samsung aims to widen its technological lead
R&D spending doubles compared with last year
HBM4 sales expected to triple in the third quarter
Shareholder returns to be strengthened, including a special dividend planned for 2027

Samsung Electronics reported a record operating profit of KRW 89.5 trillion in the second quarter, driven by surging investment in artificial intelligence (AI) infrastructure by major technology companies and strong demand for AI memory products.
The company now faces two major challenges:
Restoring profitability in its DX (Device eXperience) division, which recorded its first quarterly operating loss since its establishment.
Developing a strategy to respond to the rapid rise of China’s semiconductor industry, particularly ChangXin Memory Technologies (CXMT).
Samsung intends to address these challenges by leveraging differentiated technologies, including AI-powered smartphones, while also strengthening shareholder returns through measures such as a special dividend.
Semiconductors Offset Weakness in Consumer Electronics
The results released on July 30 highlight a sharp contrast between Samsung’s two main business segments.
The DS (Device Solutions) division, which includes the semiconductor business, generated an operating profit of KRW 89.2 trillion.
In contrast, the DX division, responsible for smartphones, televisions, and home appliances, recorded an operating loss of KRW 800 billion, mainly due to rising component costs.
This marks a complete reversal from the previous year, when:
the DX division generated KRW 3.3 trillion in operating profit; and
the DS division earned only KRW 400 billion.
All Semiconductor Businesses Improve
The DS division’s performance is no longer driven solely by memory chips.
Both the System LSI and Foundry businesses, long regarded as Samsung’s weaker segments, also returned to growth.
Key drivers included:
Higher shipments of HBM4, the sixth generation of High Bandwidth Memory.
Delivery of the world’s first engineering samples of HBM4E, the seventh generation, according to Samsung.
Stronger sales of mobile application processors (SoCs) and image sensors, enabling the System LSI business to achieve record first-half revenue.
Improved foundry performance, supported by increased orders from major U.S. customers.
Samsung Seeks to Revive the DX Division
To restore profitability in its consumer electronics business, Samsung plans to:
strengthen its premium smartphone lineup;
expand the range of the new Galaxy Z8 foldable smartphones; and
accelerate the development of AI-powered home appliances.
Against a backdrop of ongoing “chipflation”—persistent increases in semiconductor costs—the company is relying on more advanced AI features and a broader product portfolio to support sales.
Responding to China’s Rapid Rise
Samsung also aims to maintain its technological leadership over CXMT, the Chinese memory manufacturer that has been advancing rapidly.
CXMT has already been gaining market share in conventional DRAM and entry-level memory products.
This trend is particularly concerning for Samsung, which has greater exposure to traditional DRAM than SK hynix, whose business is more heavily focused on HBM products.
To preserve its competitive edge, Samsung is significantly increasing its investment in research and development.
The company announced that its R&D spending reached KRW 16 trillion in the second quarter—double the KRW 8 trillion invested during the same period last year.
HBM4 Sales Expected to Surge
Samsung believes it has both the time and the financial resources needed to execute its strategy.
According to Kim Jae-joon, Executive Vice President of the Memory Division:
“HBM4 sales in the third quarter are expected to be more than three times higher than in the previous quarter.”
He added:
“In the second half of the year, HBM4 will account for well over 60% of Samsung’s total HBM sales.”
Regarding the next-generation HBM4E, he stated:
“Discussions with customers regarding deliveries scheduled for 2027 have already been completed. Thanks to our technological leadership, we believe we have a highly competitive product that will be commercialized on schedule.”
A New Shareholder Return Policy
Samsung will soon announce a new shareholder return policy to replace the current program, which expires this year.
Chief Financial Officer Park Soon-cheol said:
“Our goal is to maximize shareholder value while maintaining the optimal balance between investments for future growth and returning profits to shareholders. We will continue to communicate regularly regarding this policy.”
Since 2024, Samsung has paid an annual ordinary dividend of KRW 9.8 trillion under its three-year shareholder return program.
No Plans for a U.S. ADR Listing
Finally, when asked about the possibility of listing American Depositary Receipts (ADRs) in the United States following SK hynix’s recent Nasdaq listing, the Chief Financial Officer ruled out such a move.
“Given our strong cash-generating capabilities, we currently have no plans to pursue an ADR listing.”

“Even More Attractive Now”: Why a Foreign Asset Manager Is Bullish on Samsung Electronics and SK hynix
By Lee Min-jae
Published: July 30, 2026, 7:00 PM
A foreign institutional investor believes that concerns over a future wave of Chinese semiconductor supply hurting Samsung Electronics and SK hynix are overstated.
In an interview with Korea Economic TV on July 30, David Fetherstonhaugh, Executive Vice President (EVP) and Investment Strategist at U.S. ETF manager VistaShares, said:
“I don’t believe China will flood the market with chips next year. Samsung Electronics and SK hynix are likely to maintain their competitive advantage for at least the next several years.”
VistaShares manages an exchange-traded fund (ETF) worth approximately ₩1 trillion, with 7.53% invested in SK hynix and 1.97% in Samsung Electronics.
Fetherstonhaugh argued that the market has recently become overly pessimistic about Korea’s leading semiconductor companies.
“Samsung Electronics and SK hynix continue to deliver outstanding quarterly results and strong execution, yet their valuations have compressed. Given their critical role in building AI infrastructure, today’s prices present an even more attractive entry point.”
Different strengths
Although both companies operate in the semiconductor industry, Fetherstonhaugh emphasized that their competitive advantages differ.
Samsung Electronics has greater exposure to the DRAM market.
SK hynix has a larger share of the High Bandwidth Memory (HBM) market, a segment with significantly higher barriers to entry.
He noted that recent market uncertainties do not affect the two companies equally.
“The new risks facing the industry are not the same for both companies. In both the short and medium term, the market has overreacted.”
Foreign investors are buying again
Trading data also shows a shift in investor sentiment. After several consecutive days of heavy selling between July 24 and 29, foreign investors turned into net buyers again on July 30.
However, Korean brokerage firms remain divided. On that day, 14 securities firms published reports on SK hynix:
2 raised their target price (Korea Investment Securities and DB Securities);
6 lowered their targets, including Samsung Securities and NH Investment & Securities;
6 left their targets unchanged.
Although Korea Investment Securities issued the highest target price, analyst opinions remain mixed.
AI infrastructure spending is the key variable
According to Fetherstonhaugh, the biggest factor determining the semiconductor industry’s outlook will be capital expenditure (CAPEX) by hyperscale cloud providers.
“The key question is whether big tech companies such as Alphabet will continue investing heavily in AI, and how much of that spending will flow to Korean companies. This earnings season should provide a clearer picture of the outlook for Korea’s semiconductor industry.”
Memory pricing will also be crucial.
“Management’s outlook for 2027 and 2028 could determine the direction of the industry.”
Concerns about China are exaggerated
Regarding fears of expanding Chinese competition, he dismissed the worst-case scenario.
“I don’t expect China to flood the market with large volumes next year. Concerns about rapid lithography capacity expansion and market share gains appear overstated.”
He added that geopolitical developments and government policies should still be monitored closely.
“The causes and the catalysts are different. Leveraged products may increase market volatility, but ultimately the fundamentals are AI demand, memory prices, and where capital spending actually goes.”
Long-term investors remain positive on Korea
Fetherstonhaugh also said that long-term foreign institutional investors continue to view the Korean stock market favorably.
“Korea has become increasingly important not only in AI, but also in defense, power infrastructure, and electrification. While there has been some short-term selling, long-term institutional investors are placing greater value on Korea’s industrial competitiveness.”
He concluded:
“The market shouldn’t focus solely on short-term stock price movements. What really matters is where capital is flowing and where profit margins are expanding.”

For the First Time, Inverse ETF Trading Exceeds Leveraged ETF Trading
By Kim Do-yeon
Published July 30, 2026, at 3:02 PM
As the Korean stock market plunged again, triggering circuit breakers (temporary trading halts) on both the KOSPI and KOSDAQ markets for two consecutive days, investors sharply increased their bets that SK Hynix’s decline would continue.
According to data released by the Korea Exchange (KRX) on July 30, trading volume for the inverse ETF “SOL SK Hynix Futures Single Stock Inverse 2X” reached 5.898 trillion won on July 29.
In comparison, the leveraged ETF “KODEX SK Hynix Single Stock Leverage” recorded trading volume of 5.165 trillion won.
This marked the first time since the launch in May of single-stock leveraged and inverse ETFs for Samsung Electronics and SK Hynix that trading volume for an inverse ETF surpassed that of a leveraged ETF.
Just one day earlier, on July 28, the two products had shown similar trading levels:
KODEX SK Hynix Leverage: 3.070 trillion won
SOL SK Hynix Inverse 2X: 2.835 trillion won
However, as the KOSPI suffered sharp declines for two consecutive sessions, investors quickly increased their bearish positions.
Analysts say that the surge in trading activity for inverse ETFs has also contributed to greater market volatility.
Han Ji-young, an analyst at Kiwoom Securities, said:
“The surge in trading of single-stock inverse ETFs is also contributing to increased market volatility.”
Leveraged and inverse single-stock ETFs require liquidity providers (LPs) to buy or sell the underlying shares in order to hedge their exposure and neutralize risk. When these hedging transactions become very large, they can amplify price movements in the underlying stock.
Previously, on July 16, the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) announced stricter deposit requirements for investors using these ETFs, raising the minimum cash requirement to 30 million won.
On July 24, regulators decided to bring the implementation date forward to July 31, earlier than originally planned.
Following the regulatory announcement, trading volumes temporarily declined:
Trading in the SOL SK Hynix Inverse 2X ETF fell from 5.692 trillion won on July 14 to around 2.6 trillion won on July 27.
The KODEX SK Hynix Leverage ETF, which typically traded between 4 trillion and 6 trillion won per day, dropped to 2.615 trillion won on July 27.
However, as the KOSPI began its sharp decline from July 28, trading activity surged again.
Trading in the leveraged ETF rose from 3.070 trillion won on July 28 to 5.165 trillion won on July 29, while trading in the inverse ETF jumped from 2.835 trillion won to 5.898 trillion won over the same period.

Summary
The article highlights that:
Investors are increasingly betting that SK Hynix shares will continue falling.
For the first time, inverse ETFs (which profit from declines) recorded higher trading volume than leveraged ETFs (which profit from gains).
Heavy activity in these products may itself increase market volatility because liquidity providers must frequently buy or sell the underlying shares to hedge their positions.
Despite tighter regulations, the sharp market decline has reignited speculative trading.

After the Stock Market Crash, Furious Retail Investors Push to Launch the Country’s First ‘Shareholders’ Party
By Jang Young-jun
Updated: July 30, 2026, 1:01 p.m.
Retail investors, enraged by stock market losses
Launch of the “People and Shareholders” Party
(Photo: Min Kyung-kwon, head of the Korea Shareholders Movement Headquarters (left), and Park Jong-jin, head of the Investor Protection Alliance (right). Source: Yonhap News.)
As South Korea’s stock market experienced, for the first time in its history, two consecutive trading halts during market hours, retail investors have begun preparations to establish a political party.
The Korea Shareholders Movement Headquarters announced today (July 30) that it has started recruiting founding members for a new political party, tentatively named “People and Shareholders.”
The group says it decided to take this step because proposals it had submitted to the National Assembly and the Presidential Office failed to result in concrete policy changes.
The KOSPI fell below the 6,000-point mark during trading on July 28 and closed yesterday at 5,663, down 5.98%.
On both days, circuit breakers were triggered, temporarily suspending trading.
In particular, SK Hynix announced record-breaking earnings but did not unveil a specific shareholder return plan. Its stock fell by more than 9% yesterday, while Samsung Electronics dropped by more than 5%.
The Shareholders Movement argues that one of the main causes of the sharp market decline is a corporate structure in which company profits are not adequately returned to shareholders.
According to the group, excluding shareholders’ views from profit distribution decisions and long-term management planning has made the market less predictable.
The movement also called for the immediate replacement of the Presidential Office’s Chief Policy Secretary and the Minister of Employment and Labor.
It accuses them of undermining market principles by bringing profit distribution into the framework of labor-management negotiations and promoting the idea of socially redistributing corporate profits.
The organization plans to recruit 200 founding members for the national party and 100 founding members for each regional branch. It will then hold a founding convention and officially register a preparatory committee for the party with the National Election Commission.

China Has Achieved Independence in DUV Technology… But Sub-14nm Processes Remain a Major Barrier
China has made progress in localizing mature semiconductor technologies
HBM and advanced processes still face productivity and yield limitations
Under US restrictions, South Korea expands its lead with HBM4 and advanced packaging
As the United States has expanded semiconductor export restrictions on China from EUV (Extreme Ultraviolet) lithography equipment to DUV (Deep Ultraviolet) lithography systems, China’s efforts to achieve semiconductor equipment independence have drawn renewed attention.
Recently, reports that China has begun using domestically developed DUV lithography equipment on production lines caused semiconductor-related stocks, including Samsung Electronics and SK hynix, to decline in the Korean stock market.

China claims success in developing 28nm DUV lithography equipment
On July 1, a semiconductor-focused Chinese media outlet on WeChat reported that Shanghai Micro Electronics Equipment (SMEE) had successfully developed a 28nm-class DUV lithography machine.
However, according to semiconductor industry analysts, there is a significant gap between market concerns and China’s actual technological capabilities.
China has achieved meaningful progress in domesticizing DUV equipment, but major technological barriers remain in advanced manufacturing processes required for AI semiconductors and High Bandwidth Memory (HBM).

DUV equipment is sufficient for mature semiconductor production
Lithography equipment is used to draw semiconductor circuits onto silicon wafers and is often described as the “printer” of a semiconductor factory.
Currently:
Advanced AI semiconductors rely on EUV lithography equipment.
Automotive chips, power semiconductors, and conventional DRAM are still widely produced using DUV equipment.
China’s semiconductor equipment company SMEE is supplying its domestically developed SSA800 28nm DUV lithography machine to major Chinese foundries such as SMIC and Huahong Semiconductor.
The equipment is considered capable of supporting production of:
automotive semiconductors;
power management ICs (PMICs);
microcontrollers (MCUs);
other legacy semiconductor products.
This has allowed China to gradually reduce its dependence on equipment from Dutch semiconductor equipment giant ASML.

However, China remains far behind ASML
Despite the progress, there are clear performance limitations.
For example:
SMEE SSA800: around 150 wafers per hour
Comparable ASML equipment: around 275 wafers per hour
Overlay accuracy is also behind ASML’s technology.
The SSA800 can achieve stable yields at the 28nm process node, but when advanced techniques such as double and multi-patterning are required for 14nm and below, yields reportedly decline significantly.
In other words, China’s current DUV technology still faces major limitations for economically viable mass production of advanced logic chips and AI semiconductors.

HBM remains out of China’s reach for now
The article emphasizes that:
China’s DUV equipment can be used for automotive chips and conventional memory products, but it is still insufficient to reliably manufacture HBM memory used in Nvidia AI accelerators.
The technologies required for these products remain extremely difficult to master:
ArF Immersion DUV lithography;
EUV lithography;
ultra-precise optical systems;
highly stable light sources.
Industry experts believe China will struggle to close the technology gap with ASML in the short term.

The US continues tightening restrictions
Washington is preparing additional restrictions through the proposed MATCH Act, which would limit not only:
sales of DUV equipment to China;
but also:
maintenance services;
spare parts;
technical support.
If implemented, the restrictions could also affect the long-term operation of existing Chinese DUV equipment.

CXMT is expanding DRAM production, but HBM remains difficult
China’s largest DRAM manufacturer, ChangXin Memory Technologies (CXMT), has secured additional funding through a major IPO and is expanding production of:
DDR4;
DDR5.
However, HBM is a completely different challenge.
According to industry experts, producing HBM without EUV technology is extremely difficult.
Beyond lithography, manufacturers must also master:
TSV (Through-Silicon Via) stacking;
thermal management;
long-term reliability.
The industry consensus is that CXMT will have difficulty catching up with Samsung Electronics and SK hynix in HBM technology in the near term.

Samsung and SK hynix’s strategy
China’s growing presence is increasing competitive pressure in the conventional DRAM market, where additional supply could weigh on prices.
In response, Samsung and SK hynix are accelerating their shift toward higher-value products.
Their strategy focuses on:
HBM4;
next-generation DRAM;
advanced packaging;
EUV-based investments at Korean production sites such as Pyeongtaek and Yongin.
Their goal is to maintain a significant technological advantage in AI memory markets.

Conclusion
China’s success in developing domestic DUV lithography equipment represents an important achievement in mature semiconductor technologies.
However, it does not yet threaten the leadership of Samsung, SK hynix, TSMC, or ASML in the most advanced semiconductor fields, including:
HBM;
AI chips;
leading-edge manufacturing processes.
Over the longer term, China’s progress in semiconductor equipment and memory production could reshape global supply chains and increase price competition.
The future competitive landscape will depend mainly on three factors:
The speed of China’s technological advancement;
The extent of additional US export restrictions;
The ability of Samsung and SK hynix to maintain their technological lead.

SK Hynix Surpasses 60 Trillion Won in Operating Profit: “The Second Half Will Be Even Better”

Updated: July 30, 2026, 3:56 a.m.

Q2 operating margin reaches 76%
Higher than NVIDIA and TSMC
Long-term supply agreements with major global tech companies
“Memory demand will continue to grow”

SK Hynix extended its streak of record-breaking quarterly results in the second quarter. With a record operating profit exceeding 60 trillion won, the company also dismissed concerns that the profitability of AI-driven semiconductors had reached its peak.

According to its earnings report released on July 29, SK Hynix posted consolidated revenue of 79.3187 trillion won and operating profit of 60.5426 trillion won for the second quarter. Compared with the same period last year, revenue increased by 257%, while operating profit surged by 557%. Compared with the previous quarter, revenue rose 51% and operating profit increased 61%.

This marks the company’s fifth consecutive quarter of record earnings. Cumulative operating profit for the first half of the year reached 98.1529 trillion won, approaching the 100 trillion won milestone.

Exceptional profitability driven by rising memory prices

A sharp increase in memory chip prices pushed SK Hynix’s operating margin to 76%, approximately 5 percentage points higher than in the previous quarter.

This margin exceeds those of several industry leaders:

NVIDIA: 65.6%
TSMC: 60.3%
Micron: 80.4% (roughly comparable to SK Hynix)

Analysts also expect Samsung Electronics’ memory division to achieve an operating margin of 75–80%, reinforcing the view that the memory industry has entered a new “golden age.”

A very strong financial position

The company’s balance sheet also strengthened significantly.

SK Hynix now holds:

88 trillion won in cash and cash equivalents
18.6 trillion won in debt

This leaves the company with 69.4 trillion won in net cash, a figure that has doubled in just three months.

However, operating profit came in slightly below analysts’ consensus estimate of approximately 64 trillion won.

“The second half will be even better”

SK Hynix expressed strong confidence about its outlook for the remainder of the year.

Its key growth drivers are expected to include:

HBM (High Bandwidth Memory)
AI server DRAM
Enterprise SSDs (eSSDs)

The company has already signed long-term supply agreements (LTAs)—typically lasting five years—with around ten major global technology companies.

During its earnings conference call, management dismissed concerns that demand could be nearing its peak:

“The growing willingness of customers to enter into long-term agreements demonstrates that demand for memory within the AI ecosystem will continue to increase.”

According to the company, actual demand in the market is exceeding expectations. This echoes recent comments by SK Group Chairman Chey Tae-won, who described the explosive demand for AI semiconductors as “chaotic,” emphasizing just how intense market demand has become.

Additional investment expected

Given the ongoing supply shortage, SK Hynix plans to accelerate investments to expand its production capacity.

The company stated:

“In an environment of severe supply shortages such as the current one, supplying the memory products required by the AI ecosystem is a responsibility of manufacturers.”

South Korea’s government is distancing itself from the idea that single-stock leveraged ETFs are responsible for the recent spike in market volatility.
Kim Yong-beom (Head of the Presidential Policy Office) and Lee Eok-won (Chairman of the Financial Services Commission) argued that the volatility is mainly the result of structural issues, such as Korea’s high proportion of retail investors, heavy use of derivatives, and the market’s concentration in semiconductor giants like Samsung Electronics and SK Hynix.
According to Lee, the recent swings are also being driven by global uncertainty over the semiconductor industry, questions about the sustainability of AI investment, and increasing competition from China.
Kim added that while single-stock leveraged ETFs have become an easy target, they should not be blamed for everything. He said the AI revolution is real, but investors are still trying to determine its long-term impact, and the market is simply going through a period of price discovery.
Critics, however, accuse the government of changing its narrative.
Just one week earlier, officials had praised the introduction of single-stock leveraged ETFs, claiming they helped bring Korean investors back from overseas markets (particularly Hong Kong), reduced capital outflows, and even supported exchange rate stability.
Now that volatility has surged, the government is emphasizing market structure and investor behavior instead of the ETFs themselves. Opposition lawmakers argue that the government is happy to take credit for the policy’s benefits while shifting responsibility for its side effects onto retail investors and the market.
In response, financial regulators said they take the recent volatility “very seriously” and pledged to work on measures to reduce market instability.