SK Hynix Outlook Upgraded to ‘Positive’ by S&P and Fitch on HBM Dominance

International credit rating agencies S&P Global and Fitch Ratings both upgraded their outlook for SK Hynix on the 25th, moving it from ‘Stable’ to ‘Positive’. The move signals growing confidence in the memory giant’s financial future, driven by its commanding lead in the high-demand market for High Bandwidth Memory (HBM). While the outlook was revised, both agencies affirmed SK Hynix’s current credit rating of ‘BBB-‘.

AI Boom Fuels Projections for Growth

S&P explained that the revised outlook is based on the expectation that SK Hynix’s financial structure will significantly improve over the next one to two years, underpinned by its strong market position in the highly profitable HBM sector. “With expanding investment in artificial intelligence (AI), the demand for HBM is surging, and SK Hynix is in an advantageous position to capitalize on this trend,” the agency noted. Fitch echoed this sentiment, stating that “competitiveness in the HBM segment is the main driver of SK Hynix’s improved performance.”

Strong Financial Forecasts

S&P projects that SK Hynix’s annual revenue growth will hit approximately 24% this year before moderating to around 6% next year. The company’s EBITDA margin is forecasted to peak at about 59% this year and is expected to remain robust at 56% in the following year. Further supporting this positive view, Fitch estimated that HBM already accounted for 30-40% of SK Hynix’s DRAM revenue last year. That share is projected to increase this year, which is expected to lead to more stable revenue streams and reduce cash flow volatility.

Competitive Pressures and Market Risks

Despite the positive forecast, both rating agencies identified increasing competition in the HBM market as a key risk factor. S&P anticipates that the HBM market will continue to grow until at least 2027 but acknowledged that SK Hynix’s rivals could gain market share. However, the agency believes the company’s “superior technology and mass production experience” make it unlikely that its leading position will significantly erode over the next two years.

Still, a potential threat remains. “If Samsung Electronics or Micron close the technology gap and achieve faster-than-expected growth in HBM, it could impact SK Hynix’s growth prospects,” S&P warned. Both agencies also pointed to broader uncertainties, including future HBM demand trends and U.S. tariff policies, as factors to watch.