SK Hynix outlook revised to positive by S&P and Fitch on memory chip strength

Investing.com -- SK Hynix received positive outlook revisions from both S&P Global Ratings and Fitch Ratings on Monday, with both agencies affirming the company’s ’BBB’ credit rating.

The rating actions reflect SK Hynix’s strengthening financial profile and its leading position in high-bandwidth memory (HBM) chips, which are experiencing strong demand due to artificial intelligence applications.

S&P forecasts SK Hynix’s revenue will increase by about 24% in 2025 before moderating to approximately 6% growth in 2026. The agency expects EBITDA margins to peak at 59% in 2025 while remaining strong at about 56% in 2026.

Fitch projects even stronger revenue growth of around 30% in 2025, driven by higher average selling prices and double-digit bit growth for DRAM memory chips.

Both agencies highlight SK Hynix’s improved balance sheet as a key factor in their outlook revisions. S&P estimates the company will lower its leverage to about 0.1x in 2025 from 0.4x in 2024, potentially reaching a net cash position by 2026. Similarly, Fitch forecasts the EBITDA leverage ratio to fall to 0.3x in 2025 from 0.7x in 2024.

SK Hynix’s competitive position in the HBM market is considered crucial to its improved performance. The company is a major provider of HBM3E chips to NVIDIA, which dominates the market for graphics processing units used in AI servers. Fitch estimates that HBM’s share of SK Hynix’s DRAM revenue is around 30%-40% in 2024 and expects this percentage to increase further in 2025.

According to OMDIA research cited by Fitch, SK Hynix became the largest global DRAM supplier by revenue in the first quarter of 2025, capturing a 37% market share.

Both rating agencies noted potential risks, including intensifying competition from Samsung Electronics and Micron Technology, particularly in the HBM segment. Additional concerns include the cyclical nature of the memory semiconductor industry, potential tariffs affecting end-demand, and ongoing geopolitical tensions given SK Hynix’s manufacturing presence in China.

S&P indicated it could upgrade SK Hynix if the company maintains a net cash position through the memory product cycle while preserving its solid position in the HBM space. Fitch similarly stated that an upgrade would depend on EBITDA leverage remaining below 1.5x and improvements in market share in both DRAM and NAND markets.

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