SK hynixEquity research

Equity research · quality sample · 16 October 2026

SK hynix.

KRX 000660 · Nasdaq SKHY (10 ADSs = 1 share). A memory cycle at its peak margin, a sell-off of 57% from the record, and an ADS line that trades at a premium.

Central value per share
₩1,275,044

Seoul price 0.2% below it; ADS price 53% above.

Purpose quality sample reportClass semiconductors · memoryData to 16 Oct 2026Review provisional

SUMMARY

Close to fair in Seoul. Well above it in New York.

Fair value against price. On 16 October 2026 the Seoul price of ₩1,272,000 is 0.2% below our central value of ₩1,275,044. The ADS close of $146.11 on 15 October is 53% above the same value converted, $95.73. The gap is the ADS premium, not the business.

The business. SK hynix leads HBM and earned a 76% operating margin in Q2 2026.S3S14 Memory remains a cycle: the ten-year mean margin is 24.7% and 2023 was a loss.S1 The balance sheet is strong, with ₩127tn of net non-operating assets after marking KIOXIA to 16 October. The open question is the margin after 2028, when ₩61.5tn of committed capacity arrives and a Chinese entrant scales.S2S26

Test result: the Seoul line passes the central-value test at or below ₩1,275,044; on 16 October it passes, 0.2% below. The ADS line passes at or below $95.73; it fails by 53%. The P/B cross-check says the price needs a sustained ROE of 28%.

What moved since the 15 October build. Three inputs were closed from dated sources. The discount rate fell from 12.25% to 10.24% (regression beta, dated ERP and country premium); on its own that moves the central value from ₩1,063,976 to ₩1,275,044. Marking the KIOXIA bond to 16 October cuts ₩44,087 per share after tax. The 2026 tax law raises the statutory rate to 27.5%; with credits, the rate used is 23.0%.

Review status: provisional. The four-round cap was reached. Rounds 1–3 each found a resolvable fact and returned the work to phase A; round 4 changed nothing, but one unchanged round does not meet the two-round rule. Open items: post-2028 margin: 32% used, ten-year mean 24.7% gives 1,075,461 KRW; beta index and window: four regressions give 1,100,094 to 1,275,044 KRW; tax credits after 2028: statutory 27.5% from 2029 gives 1,219,808 KRW; H2 2026 pricing until the 28 October Q3 report; terminal RONIC 15% (judgement).

What would change the view. Q3 results and 2027 contract terms on 28 October; any shipment of CXMT 4F² server modules; a change to the ADS conversion limit; the beta choice (section 09).

Set your own scenario weights

Case values are per Seoul share and come from the model. Weighted value = Σ weight × case value. The ADS line converts at 1,331.98 won per dollar. Weights are judgement, not probabilities.

EVENT IMPACT NOTE

Thesis challenged.

No event since the H1 report changes the 2026–27 cash flows. The October fall matches the market move times beta: a de-rating plus rate repricing and flows. CXMT and the AI-funding reset challenge the margin after 2028, which is where the cases differ. They are tested as sensitivities, not yet as facts.

Window: from the H1 2026 report on 18 August to 16 October 2026. Each event is graded by source level and assigned to one channel. An event without a mechanism is sentiment and does not enter the value.

ChannelEventsMechanismModel effect
estimate
Estimate revision
2026-09-30: Tracker sees conventional DRAM contract prices +10-15% q/q in Q4 2026 (level 4)S29
2026-10-07: DRAM spot prices flat (DDR4 1Gx8 at 46.32 USD, 6 Oct) (level 4)S54
2026-10-10: CXMT says its first 4F2 DRAM will be a server DDR5 RDIMM by year-end (level 5)S26S27
2026-10-16: KIOXIA share price 55% below 30 June; 3-for-1 split from 1 Oct (level 2)S55S56
2026-10-16: Won at 1,332 per USD, from 1,502 average in Q2 (level 5)S34S51
H2 2026 revenue and the non-operating KIOXIA asset are re-marked; 2027 volumes are unchanged under long-term agreements.H2 uses +6%; at +12% central value is 1,309,896 KRW
No input change; cycle panel
Terminal margin at the cycle mean (24.7%) gives 1,075,461 KRW
-40.0tn KRW pre-tax, -44,087 KRW per share after tax
H2 factor 0.940; FX-only H2 gives 1,240,191 KRW
multiple
De-rating
2026-10-08: Largest private AI lab's revenue run-rate reported about 20bn USD below the earlier figure (level 5)S35S36
2026-10-09: Firmus withdraws its ASX IPO (level 5)S38S39
2026-10-15: Memory shares hit on China supply and 2029 oversupply worries (level 5)S43
The market pays less for the margin after 2028; reverse DCF and P/B-ROE show what the price now requires.No change to 2026-27 volumes under long-term agreements; tested in the reverse DCF
None on cash flows
Reverse DCF and P/B-ROE: price requires the margin and ROE shown
discount rate
ERP and rate repricing
2026-09-16: Federal Reserve raises the policy rate to 3.75-4.00% (level 1)S32
2026-10-14: US CPI +3.7% y/y for September (level 1)S31
2026-10-16: 10-year KTB at 4.20%; implied ERP 4.20% (1 Oct) (level 4)S57S58S59
Dated inputs replace assumptions; the rate row shows ±1pp.Risk-free input is the 16 Oct KTB 10y (4.20%); +1pp on r moves central value to 1,156,955 KRW
Rate sensitivity row; no change to the dated ERP (1 Oct 2026)
r = 10.24%
flows
Supply overhang and forced selling
2026-10-07: 90-day lock-up from the 9 Jul ADS offering ends (our count) (level 2)S1
2026-10-15: Seoul shares fall 11.06%; foreign net selling 1.11tn KRW; KOSPI seventh losing session (level 5)S22S23
Lock-up end and foreign selling move price, not value; the abnormal return against the market is small.Price only; value unchanged
Price only
read-across
Read-across
2026-10-08: Samsung Electronics guides Q3 operating profit to about 107.4tn KRW (level 3)S53
2026-09-28: Second private AI lab's draft prospectus reported; listing timing reported for later in 2026 (level 5)S37
Peer guidance confirms Q3 memory pricing; AI-lab listings would set a reference price for AI equity.Supports the H2 factor; no input changed before the 28 Oct report
None; not public on EDGAR

CONTEXT

SK hynix in one page.

SK hynix makes DRAM, HBM and NAND in Korea and China. It lists in Seoul (000660) and, since July 2026, as ADSs on Nasdaq (SKHY).S1 H1 2026 revenue was ₩131.9tn and operating profit ₩98.2tn.S2

ForceLevelCurrent signalSource
HBM and server DRAM demandMicroUndersupplied through 2027 per trackers; prices still rising in Q4S29, S30, S63
Long-term agreementsMicroAbout ten customers; price bands on part of supplyS45, S46
China competitionMicroCXMT 9.5% DRAM share; 4F² server module promised by year-endS26, S28
Capacity buildMicro₩61.5tn committed; Y2, M17, P&T7S2, S7–S9
Peer read-acrossMicroSamsung guides Q3 operating profit to about ₩107.4tnS53
US rates and inflationMacroCPI 3.7%; Fed hiking; 10-year KTB 4.20%S31, S32, S57
AI fundingMacroLab revenue reset; Firmus IPO withdrawnS35–S39
WonMacroAbout ₩1,332 per dollar, from ₩1,538 in JulyS1, S56

RESEARCH QUESTIONS

Five questions decide the value.

QuestionAnswered in
What margin and return on equity are normal for this business over a full cycle?03, 10, 12
What is operating value and what is investment value in the balance sheet?04
Does new capital earn its cost, and at what discount rate?05, 09
Why does the ADS trade above Seoul, and can that change?06
Did the October sell-off and the AI-listing news change value, or only price?Event note, 07, 08

METHOD

How this report was built.

  • Validated data. Financial figures come from SEC filings and company releases. Each figure states its source, period and whether it is reported or calculated by us. Conflicting sources are printed side by side.
  • Classification first. The company is routed by sector, sub-sector and the shape of its profit history before any valuation. Metrics that do not fit the class are named and not computed.
  • Facts before judgement. Inputs that a source can settle were closed first: the statutory tax rate, the risk-free rate, a regression beta, a dated equity risk premium and country premium, and the KIOXIA look-through. Items no source can settle sit in sensitivity tables and do not drive the review.
  • Deterministic model. One script computes every value in this report from stated inputs and stored source files. Prose numbers are read from its output.
  • Blind multi-reviewer challenge. Reviewers saw the report without the conclusion and looked for omissions, errors and the strongest opposing case. The review is stable when two rounds in a row keep the test result, move the central value by less than 1%, and find no new resolvable fact.
  • Event scan. Events since the last filing are split by channel: estimate, multiple, discount rate, flows and read-across. Only events with a mechanism enter the model.
  • Signal strength. Strong: filings and official data. Medium: industry trackers and dated academic datasets. Weak: press reports, columns and platform data, kept in chapter 15.
  • Your weights. The calculator in the Summary lets you set case weights. The conclusion shows which judgement it rests on.
  • Compared with typical AI-written research. Typical output blends sources and states one target. Here every number has a source grade, the cycle is normalised by rule, and the price is reversed into the margin and the return on equity it requires.

01 — RESEARCH NOTE

The economic question and the route.

How much of today's profit is a cycle peak, and how much is a new level that HBM and long-term agreements can hold?

SK hynix files with the SEC as a foreign private issuer under SIC 3674, semiconductors.S13 It reports one segment.S2 The classifier routes SIC 3674 to the semiconductor class with the memory sub-route. Operating profit turned negative in 2023 and rose to ₩47.2tn in 2025, so the cycle test applies inside that route.S1S15S16 We classify on operating profit, not net profit, because H1 2026 net profit includes ₩62.9tn of revaluation gains on financial instruments.S2

Route: SIC 3674 → semiconductors, memory sub-route → P/B against sustainable ROE, beside the cash-flow model
SignalValueSource; label
SectorSemiconductors, SIC 3674; sub-route memorySEC filer record
ReportingForeign private issuer (Form 20-F, 6-K)SEC filer record
SizeLarge: ₩927tn market valueCalculated by us at the 16 Oct close
ProfitabilityMarginal: one loss year (2023) in 2021–2025Company releases; calculated by us
HistoryLong: KRX listing 1996424B4
CapitalTangible: intangibles, including goodwill, 1.6% of parent equityInterim statements; calculated by us

Screen and check. The screen is price to book against the return on equity the business can sustain, shown in section 12 beside the cash-flow value. The check is the memory cycle-indicator panel in section 13. The class rule caps the terminal margin at the ten-year mean unless a structural shift is shown; section 10 states the evidence we use and the value at the mean.

Metrics we do not apply. Faustmann is not computed: it belongs to the profitable-industrial class. The current quarter is not a norm, and peak margin is not capitalised. One multiple for all semiconductor sub-sectors is not used. Average return on equity over five years is not used as the norm, because one memory cycle is longer. Analyst forecasts are not used to date the cycle.

02 — RESEARCH NOTE

A memory franchise led by HBM.

DRAM was 77.3% of Q1 2026 revenue and NAND 22.0%.S1 SK hynix ranked first in HBM with a 56.4% share of Q1 2026 HBM market revenue, according to the tracker cited in the prospectus.S1 The company states long-term supply agreements with about ten customers.S45S46

Two trackers disagree on DRAM share

TrackerPeriodSK hynix DRAM shareScope
IDC, in the prospectusQ1 202629.1%, rank 2DRAM including HBM
TrendForceQ2 202624.9%, rank 2DRAM revenue ranking; Samsung 39.4%, Micron 23.3%, CXMT 9.5%

We do not average them. The periods differ, and the second tracker says SK hynix's ASP gain was limited by its high HBM bit share in Q2.S28 We use the TrendForce figure for competitor shares, because it covers all named suppliers in one period.

Customers

The largest customer was 23.9% of 2025 revenue. The two largest were 14.8% and 12.4% in Q1 2026.S1 In H1 2026 they were 13.35% and 13.03%, against 27.31% for one customer in H1 2025.S2 Concentration has fallen. The filings do not name them. The prospectus says sales concentrate in the United States and China.S1 Reports describe SK hynix as an Nvidia supplier.S45 That the largest customer is Nvidia is our inference and is Unverified.

03 — RESEARCH NOTE

Ten years of the cycle.

The annual operating margin moved from −23.6% in 2023 to 74.4% in H1 2026, about three years. Normalisation therefore uses margin, not profit in won.

YearRevenue, ₩tnOperating profit, ₩tnMarginSource
201617.203.2819.1%S17
201730.1013.7245.6%S18
201840.4520.8451.5%S19
201926.992.7110.0%S20
202031.905.0115.7%S21
202143.0012.4128.9%S16
202244.657.0115.7%S15
202332.77-7.73-23.6%S1
202466.1923.4735.5%S1
202597.1547.2148.6%S1
H1 2026131.9098.1574.4%S2
Cycle mean margin = Σ (operating profit / revenue), 2016–2025 / 10 = 24.7%
Q2 2026 margin = 60.54 / 79.32 = 76.3%
Revenue-weighted mean 2016–2025 = Σ operating profit / Σ revenue = 29.7%

We anchor the low case on the simple mean, because the weighted figure gives the HBM years most of the weight and so assumes part of the answer. The weighted figure appears as a sensitivity in section 10.

All values are reported by the company; margins are calculated by us. The 2020 operating profit is read from a release that states +84% on 2019; treat it as Unverified to the second decimal.S21

04 — RESEARCH NOTE

Separate the business from the balance sheet.

Q2 2026 net profit of ₩93.9tn exceeded operating profit of ₩60.5tn. Finance income was ₩65.9tn, including ₩53.2tn of valuation gains and ₩10.0tn of dividend income.S2 The prospectus attributes the valuation gains primarily to the KIOXIA interest.S1 We value operations from operating profit and add the investments once.

Net non-operating assets = cash ₩95.1tn + other long-term investments ₩19.2tn + KIOXIA bond at today's price ₩26.1tn + tax released on the mark-down ₩7.8tn + ADS proceeds ₩39.9tn − deferred tax liability ₩7.8tn − current tax payable ₩32.0tn − borrowings ₩18.6tn − leases ₩2.5tn = ₩127.2tn

Cash includes cash, short-term instruments, short-term investments and long-term instruments at 30 June 2026.S2 We deduct the ₩7.8tn deferred tax liability and the ₩32.0tn of current tax payable on H1 profit, because the cash flows start in H2.S2 The ADS proceeds of ₩39.9tn arrived on 14 July, after the balance sheet date.S4

KIOXIA: look-through from the filings

SPC 1 sold its remaining KIOXIA equity in June 2026.S1 The remaining exposure is the SPC 2 convertible bond. The audited notes value it on KIOXIA's equity value and SPC 2's 14.30% ownership of KIOXIA, less a liquidity discount of 8.95% at 31 December 2025.S1 In H1 2026, ₩66.08tn of long-term investments moved from Level 3 to Level 2 after a change in valuation method.S2 The amount matches the bond marked to the KIOXIA share price, so we treat it as the bond's 30 June value. The prospectus also describes the bond as convertible into about 15.0% of SPC 2 equity; the valuation note is the basis we use, because it reconciles to the reported values below.

Bond value = 14.30% × KIOXIA issued shares × KIOXIA price (pre-split) × JPY/KRW × (1 − discount)
DateShares, mKIOXIA price, ¥ (pre-split)JPY/KRWDiscountOur value, ₩tnReported, ₩tnGap
31 Dec 2025546.09*10,4359.1898.95%6.826.75 (Level 3)1.1%
31 Mar 2026546.0919,0809.4808.95%12.8613.61-5.5%
30 Jun 2026548.0289,6809.5220%66.9266.08 (to Level 2)1.3%
16 Oct 20261,644.05 (post-split)13,375 (post-split)8.4081.25% (30 June implied)26.11——

KIOXIA's issued shares come from its own release; the 31 December count was not disclosed there, so the 31 March count is used (*).S55 Prices and exchange rates are daily closes from the stored series.S56 All three reported values reconcile within 6%. The 30 June value implies a discount of 1.25%, which we carry forward. SPC 2 holds about 235m KIOXIA shares after the split. At ¥13,375 on 16 October the bond is worth ₩26.1tn, ₩40.0tn below 30 June. Deferred tax on that fall at the 27.5% statutory rate would be ₩11.0tn; we release only ₩7.8tn, the reported deferred tax liability, because the filings do not show that a net deferred tax asset would be recoverable. Net effect: ₩-44,087 per share.

What stays open. The notes say SK hynix's KIOXIA interest is limited to a certain percentage for a specified period, and SK hynix cannot appoint directors.S2 The conversion terms of the bond are not disclosed. This is an irreducible item: it moves value through the discount, shown below, not through the share count.

KIOXIA sensitivity (central case)Value per share
Discount 0%₩1,275,499
Discount 1.25% (central)₩1,275,044
Discount 8.95% (31 Dec 2025 level)₩1,272,252
KIOXIA price −20%₩1,267,880
No deferred tax released₩1,264,291

The ₩40.0tn buyback runs to 19 November.S5 The policy returns over 50% of 2025–2027 free cash flow.S6 H1 2026 finance expenses include ₩4.0tn of non-cash losses on exchangeable-bond derivatives, offset in equity.S11 We leave cash and the share count unchanged. If the whole programme executes at its implied average of about ₩1.66m per share, above the central value, value per remaining share falls to ₩1,261,829.S5

Price / tangible book (pro forma) = ₩927tn / (262.4 + 39.9 ADS proceeds − ₩32.1tn KIOXIA after tax − 4.3 intangibles) = 3.49x

05 — RESEARCH NOTE

Capital spending and returns on it.

Capital spending was ₩8.3tn in 2023, ₩15.9tn in 2024 and ₩27.5tn in 2025.S1 H1 2026 spending was ₩18.3tn.S2 Coverage of the Q2 call puts 2026 spending in the high-₩40tn range; the exact figure is Unverified, and we use ₩47tn.S46 Unrecognised capital commitments rose from ₩6.7tn to ₩61.5tn in six months.S2 The board approved Y2 for ₩35.2tn, M17 for ₩19.1tn and P&T7 for ₩7.1tn.S7S8S9

Maintenance proxy = depreciation and amortisation: 2023 ₩13.6tn, 2024 ₩12.5tn, 2025 ₩13.9tn
Growth capex 2025 ≈ 27.5 − 13.9 = ₩13.6tn; 2026 ≈ 47.0 − (7.8 H1 + 8.5 H2) = ₩30.7tn (calculated by us)

Capital spending averaged 26% of revenue in 2023–2025.S1 The central and high cases use 25% after 2027; the low case uses 22%.

The company does not split maintenance from growth spending. Depreciation is our proxy, and it is labelled as such.

Invested capital = PP&E + intangibles + right-of-use assets + receivables + inventories
ROIC 2025 = 47.2 × (1 − 14.9% effective tax) / average(93.0; 116.4) = 38.4%
Incremental ROIC 2024→2025 = (40.2 − 19.5) / (116.4 − 93.0) = 89%
Normalised ROIC on current capital = 24.7% × ₩281.0tn × (1 − 23.0%) / ₩161.4tn = 33.1%

The incremental return is mostly price, not volume: the trackers report modest bit growth and large price rises.S28 The H1 2026 annualised return of 109% is a peak figure, not a norm. No purchase-obligation stress is run, so no loss rate is used; the commitments are capital spending, which the cases carry directly.

06 — RESEARCH NOTE

The July ADS offering and the premium.

SK hynix sold 177.9m ADSs at $149.00 on 9 July 2026, for $26.51bn gross.S1 Ten ADSs represent one common share. The offering issued 17.79m new shares, which is 2.4% of the 728.9m shares outstanding after it.S1S4 There was no over-allotment option. The prospectus says the company and certain affiliates may agree a 90-day lock-up from its date.S1 By our count it ended about 7 October 2026. Whether any locked holder has sold since is Unverified. Three cornerstone investors indicated up to $7bn.S1 The prospectus does not describe a lock-up for them.

Holders

HolderShares, mStake
SK square146.120.50% before the offering
National Pension Service57.48.06% before the offering
BlackRock36.45.11% before the offering
Capital Research25.13.53% before the offering

SK square must hold at least 20% under Korean holding-company law, and this capped the offering size.S1 On outstanding shares its stake is 20.04% after the offering and 20.73% after the buyback cancels 24.07m shares. The legal test uses issued shares including treasury shares, which gives about 20.00% and 20.68%, and headroom of about 24.1m shares on issued shares; the formula below uses outstanding shares and gives more.S1S5

New-share headroom after the buyback = 146.1 / 20% − (728.9 − 24.1) = 25.7m shares

The premium is structural

The Korea Securities Depository was reported to cap conversion into ADSs at 2.5% of shares, and the offering used the cap.S40 New ADSs can be created only after others are cancelled. The prospectus warns that a holder who withdraws shares may not be allowed to deposit them again.S1S42

Premium = ADS price / (KRX price / 10 / KRW per USD) − 1
DateADS, $KRX, ₩KRW/USDKRX value per ADS, $Premium
9 Jul 2026 (pricing)149.002,186,0001,538.05142.134.8%
9 Sep 2026198.631,856,0001,339.2138.5843.3%
14 Oct 2026$147.551,419,0001,345.10$105.4939.9%
15 Oct 2026$146.111,262,0001,342.00$94.0455.4%

Rows one and two are as reported; row one uses the prospectus conversion rate of ₩1,538.05 (noon rate, 2 July). At the 9 July Seoul opening base rate of ₩1,509.90 in the KRX filing, the premium was 2.9%.S1S4S41 Rows three and four are calculated by us from closes on the same calendar day.S22S34S49S56 The Seoul close comes about 15 hours before the US close, so a same-day premium also contains one US session of news.

ADS value with no premium (15 Oct) = 1,262,000 / 10 / 1,342.00 = $94.04; move from the $146.11 close = -35.6%

If the conversion limit were lifted and the premium closed through the ADS price, the ADS would move by that amount with no change in the business.

07 — RESEARCH NOTE

The October sell-off: cause, mechanism, evidence.

The Seoul shares fell for seven sessions to ₩1,262,000 on 15 October, down 11.06% on the day, and closed at ₩1,272,000 on 16 October.S22S23S56 That is 57.4% below the record close of ₩2,987,000.S24 One source dates the high to 19 June intraday, another to 25 June at the close.S24S25 A press report gives a record close of ₩2,919,000 on 22 June, which gives −56.4% at the 16 October close. Both press sources agree on ₩2,987,000; the exchange record itself was not opened, so the level is Unverified within about 2%. Foreign investors sold a net ₩1.11tn of the shares on 15 October.S22 Over five sessions the shares fell 26%, Samsung 22% and Micron about 11%.S43

Abnormal return, 2–16 Oct = -30.9% − 1.78 × KOSPI -19.1% = +3.0%

The two-year raw KOSPI beta explains the whole fall; the residual is small and positive. Against Samsung the shares fell 9% more. In the US over 2–15 October the ADS fell 25%, Micron 13% and the semiconductor index 12%.S56 SK hynix is a large part of KOSPI, so the market return partly contains its own. The test still shows a sector and market move, not news specific to the company.

CauseMechanismEvidence and gradeEffect on value
US inflation and ratesHigher discount rate; dearer AI financingCPI +3.7% y/y in September; Fed raised to 3.75–4.00% on 16 Sep. Level 1.S31S32Rate sensitivity, section 11: about ₩274,844 per share across ±1pp
CXMT 4F² DRAM claimDenser commodity DRAM; share and price pressure from 2027Company remarks on 10 Oct; no speeds, capacities or yields; CXMT 9.5% DRAM share. Level 4–5.S26S27S28Mid-cycle margin, not 2026–27 HBM; Unverified that volume ships in 2026
AI funding doubtsExternal capital funds AI capex; capex funds HBMPrivate lab revenue run-rate about $50bn vs about $68–70bn reported earlier; Firmus IPO withdrawn. Level 5.S35S36S38S39Demand after 2027; contracts cover most of 2027S30
Oversupply in 2029Industry capacity buildOne newspaper column; company commitments ₩61.5tn. Level 6 opinion; Level 2 commitments.S44S2Terminal margin
Flows and leverageForced selling amplifies movesForeign net selling; leveraged single-stock products. Level 5.S22S25Price only; no change to value
Lock-up end, about 7 OctMore shares free to sellTiming coincides; no sale disclosed. Unverified.S1None measured

What did not change. No SK hynix filing since 19 August changes guidance, contracts or capacity plans.S10S12 Two September 6-Ks answered press reports on a Solidigm pre-IPO raise and a Chongqing packaging stake sale; nothing was decided. Trackers still expect DRAM contract prices to rise 10–15% in Q4 2026 and HBM prices to rise in 2027.S29S30 The Q3 report on 28 October is the next hard data.S10

08 — RESEARCH NOTE

AI listings: demand signal or multiple signal?

Three events in the week before the sell-off involve AI companies raising public money. We separate what they say about HBM demand from what they say about valuation multiples.

EventFact, with gradeDemand channelMultiple channel
Firmus withdraws ASX IPO, 9 OctSought about US$5bn at about US$30bn; cites market volatility. Level 5, company statement quoted.S38S39Weak: it will seek private funding; no order cancellation reportedStrong: buyers refused the price
Largest private AI lab: revenue run-rate about $50bnEarlier $68–70bn figure counted partner gross revenue; definitional, not a cancellation. Level 5, unnamed sources.S35S36Medium: slower revenue raises the funding gap for computeStrong: reset of growth expectations
Second private AI lab: listing reported for NovemberDraft prospectus seen by Reuters: 2025 net loss $42bn, $518bn of compute commitments. Not public on EDGAR; Unverified.S37Positive if it lists: new equity funds computeNegative if it fails: a reference price for AI equity

For SK hynix the demand channel works with a lag. Agreements and HBM allocation cover most of 2027.S30S46 The multiple channel works at once, through the discount rate and the terminal margin the market will pay for. Our cases change the margin after 2027, not the 2026–27 demand.

09 — RESEARCH NOTE

Tax and discount rate from dated sources.

These inputs were closed from primary sources before any review round. Each is computed in the model from stored files.

Tax

From fiscal years starting on 1 January 2026 the top national corporate rate is 25%, and local income tax adds 10% of it.S60S61S62 The top statutory rate is therefore 27.5%, against 26.4% in 2025.

Statutory 2026 = 25% × (1 + 10%) = 27.5%
PeriodProfit before tax, ₩tnIncome tax, ₩tnEffective rateStatutoryCredit gap
202423.894.0917.1%26.4%9.3%
202550.477.5214.9%26.4%11.5%
H1 2026174.3340.0623.0%27.5%4.5%

The company attributes the low 2024 and 2025 rates primarily to tax credits on capital spending.S1 H1 2026 uses management's estimate of the full-year effective rate.S2 We use 23.0% for H2 2026 to 2028. From 2029 and in the terminal value we use 27.5% less a sustainable credit of 4.5%, the smallest gap of the three periods: 23.0%. The smallest gap is the conservative choice, because credits scale with capital spending and the 2026 profit base is the highest in the series. If credits end, the statutory rate applies; that row is in section 10.

Terminal tax = 27.5% − min(9.3%, 11.5%, 4.5%) = 23.0%

Discount rate

r = risk-free + β × (mature-market ERP + Korea country premium) = 3.81% + 1.34 × (4.20% + 0.61%) = 10.24%
Risk-free = KTB 10y 4.20% − Korea sovereign default spread 0.39% = 3.81%

The KTB yield on 16 October was 4.20%; the 15 October close was 4.193%.S57S33 A Korean government bond is not default-free, and the country premium already prices Korea risk, so we deduct the rating-based default spread from the same country file (0.39%, Aa2).S59 Without the deduction the central value is ₩1,224,860. The equity risk premium is the implied premium for the S&P 500 on 1 October 2026, 4.20%; the July 2026 country file uses the same mature-market figure.S58S59 Korea's country premium is 0.61% in the July 2026 file, against 0.64% in January.S59

Beta is a regression of weekly returns. Against KOSPI we use won returns. Against MSCI ACWI we use dollar returns, with the share price converted at the weekly won rate. Blume adjustment: 0.67 × raw + 0.33.S56

Index and windowWeeksnRaw βR²Blume βrCentral value per share
KOSPI, 2 years2024-W42 to 2026-W421041.780.731.5211.83%₩1,100,094
KOSPI, 5 years2021-W42 to 2026-W422601.660.581.4411.41%₩1,139,647
MSCI ACWI, 2 years2024-W42 to 2026-W421041.630.121.4211.31%₩1,149,700
MSCI ACWI, 5 years (central)2021-W42 to 2026-W422601.330.151.2210.24%₩1,275,044
Operating beta = equity beta × market value / (market value − net cash) = 1.22 × ₩927tn / (₩927tn − ₩81.9tn) = 1.34

The regression measures the beta of the equity, which holds net cash. Net cash (cash and financial assets plus ADS proceeds, less borrowings, leases and tax payable) has a beta near zero and is added separately, so the operating cash flows carry the higher operating beta. KIOXIA is left in the risky part. The table's r and values use the operating beta for each regression. With the unadjusted equity beta the central value would be ₩1,358,263.

We use the five-year ACWI beta. The premium is a mature-market premium, so the index should be global. Five years cover the 2022–23 downturn and the HBM upturn; two years cover only the upturn. SK hynix is a large part of KOSPI, which pulls the local beta towards its own volatility. The choice is judgement, and the four rows show its cost: the KOSPI two-year beta gives a value 14% lower.

10 — RESEARCH NOTE

Value the cycle, not the quarter.

FCFF = operating profit × (1 − tax) + D&A − capex − 20% × max(Δrevenue, 0); tax 23.0% to 2028, 23.0% from 2029

Working capital is not released when revenue falls; in past downturns inventory rose.

D&A(t) = D&A(t−1) + (capex(t−1) − D&A(t−1)) / 5; capex 2027 = ₩55tn; later capex = max(ratio × revenue, D&A)
Terminal FCFF = NOPAT(2036) × (1 − g / RONIC), g = 3%, RONIC = 15%; TV = FCFF / (r − g)
r = 10.24%, from section 09
Value per share = (EV + ₩127.2tn) / 728.87m shares; per ADS = value / 10 / 1,331.98

All cases share H2 2026. Revenue is twice Q2, converted from the Q2 average of ₩1,501.93 per dollar to ₩1,332, with a 6% Q4 contract-price uplift: factor 0.940.S51S52S29 Won costs stay at the Q2 level, so the H2 margin falls below Q2. Cash flows are discounted from 16 October: H2 2026 at 0.25 years, each later year at its mid-point (year minus 2026, less 0.29), and the terminal value at 8.71 years, the same mid-year timing. Revenue grows 6% a year from 2030 to 2035 in the low and central cases and 8% in the high case, then 3% in the terminal value. The cases differ from 2027. Cycle repeats copies the 2019 and 2023 revenue falls of about one third and returns to the ten-year mean margin. Plateau holds 2027, then falls, and settles at 32%. New trend line treats HBM and long-term agreements as a higher floor, at 42%.

Terminal margin above the cycle mean. The class rule allows a terminal margin above the ten-year mean of 24.7% only with evidence of a structural shift. Our evidence: HBM is sold under long-term agreements with about ten customers, with price bands on part of supply;S45S46 SK hynix held 56.4% of Q1 2026 HBM revenue;S1 DRAM supply stays short of demand in 2026 and 2027 per one tracker.S63 Against it: CXMT's denser DRAM, and ₩61.5tn of committed capacity.S26S2 The evidence is medium strength. At the mean the central value is ₩1,075,461; at the revenue-weighted mean of 29.7% it is ₩1,212,248.

CaseRevenue growth 2027–29Margin 2027–29Margin from 2030Capex / revenueValue per shareValue per ADSTerminal share of EV
Cycle repeats-30%, -30%, 5%45%, 15%, 20%24.7%22%₩713,544$53.5748%
Plateau, then normal cycle10%, -15%, -10%65%, 45%, 35%32.0%25%₩1,275,044$95.7350%
New trend line25%, 10%, 0%72%, 62%, 52%45.0% (2030), 42.0% from 203125%₩2,490,779$187.0057%
Sensitivity (central case)Value per shareNote
Base₩1,275,044FX-adjusted H2, +6% price
H2 at Q2 won revenue, no FX change₩1,314,307Ignores the stronger won
H2 FX change only₩1,240,191No Q4 price rise
H2 FX change, +12% price₩1,309,896Upper Q4 tracker range, S29
Capex 22% of revenue₩1,308,283Below the 2023–2025 average
Terminal margin 29.7% (weighted mean)₩1,212,248Section 03
Terminal RONIC 25%₩1,330,231Near normalised ROIC
Beta 1.1 (r 9.10%)₩1,458,646Below the regression range
Beta 1.5 (r 11.02%)₩1,180,323Near the KOSPI two-year beta
Terminal margin at the cycle mean₩1,075,461Class rule default
Statutory 27.5% in all years₩1,195,212Credits end
Statutory 27.5% from 2029₩1,219,808Credits end after 2028
Tax 24% (previous input)₩1,257,003For comparison
Korea premium 0.64% (Jan 2026)₩1,269,845Older country file

The ADS values convert the per-share value at the spot rate and carry no premium.

11 — RESEARCH NOTE

What the price requires.

The matrix holds 2027 at +10% revenue and a 65% margin. It then sets the margin from 2029 (rows), with 2028 at the midpoint between 65% and the row margin, and the 2029 revenue as a multiple of 2025 revenue (columns). Values are per share in thousands of won; bold cells are at or above the ₩1,272,000 close.

2029 revenue = multiple × ₩97.1tn; growth 2028–29 = (2029 revenue / 2027 revenue)^0.5 − 1; 6% a year after 2029
Margin from 20291.5x2.0x2.5x3.0x3.5x
20%775k850k924k998k1,064k
25%870k976k1,081k1,185k1,281k
30%965k1,101k1,237k1,371k1,498k
35%1,060k1,227k1,393k1,558k1,716k
40%1,154k1,352k1,549k1,745k1,933k
45%1,249k1,478k1,705k1,932k2,150k
50%1,344k1,603k1,862k2,118k2,368k

At the ten-year mean margin of about 25%, no column reaches the price. At a 35% margin the price needs 2029 revenue of about 2.1 times 2025, or ₩207tn; at 40%, about 1.8 times, or ₩175tn (interpolated). The 2026 estimate is ₩281tn; no year before 2026 exceeded ₩97tn.

Rate8.24%9.24%10.24%11.24%12.24%
Cycle repeats₩890,856₩787,875₩713,571₩657,484₩613,684
Plateau, then normal cycle₩1,649,218₩1,431,799₩1,275,100₩1,156,955₩1,064,795
New trend line₩3,383,324₩2,864,320₩2,490,913₩2,209,926₩1,991,211

12 — RESEARCH NOTE

Price to book against sustainable return on equity.

For memory the class route values book equity on the return it can sustain over a cycle. A business that earns ROE on book and grows at g is worth this multiple of book:

Justified P/B = (ROE − g) / (r − g), g = 3%, r = 10.24%
Book (pro forma) = parent equity ₩262.4tn + ADS proceeds ₩39.9tn − KIOXIA after tax ₩32.1tn = ₩270.1tn
P/B now = ₩927tn / ₩270.1tn = 3.43x; ROE the price requires = 3% + 3.43 × (10.24% − 3%) = 27.9%
Sustainable ROEr = 9.24%r = 10.24%r = 11.24%
10%1.12x0.97x0.85x
15%1.92x1.66x1.46x
20%2.72x2.35x2.06x
25%3.53x3.04x2.67x
30%4.33x3.73x3.28x
35%5.13x4.42x3.88x
ROE referenceValueBasis
2024 reported31.1%Net profit ₩19.8tn / average equity; 424B4, calculated by us
2025 reported44.1%Net profit ₩42.9tn / average equity; includes KIOXIA gains
Mid-cycle operating ROE19.8%Ten-year mean margin × 2026E revenue × (1 − terminal tax) / pro forma book
Central case, terminal year30.6%Central terminal NOPAT / today's book; overstates, since book grows
Required by the price27.9%Formula above

At mid-cycle operating ROE the justified value is ₩858,920 per share; at the central terminal ROE it is ₩1,412,545. The price needs a sustained ROE of 28%. That is below the 2024 and 2025 figures and above the mid-cycle figure. The cross-check agrees with the cash-flow model: the price is fair only if the margin after 2028 stays well above the old cycle mean.

The test uses operating profit for the mid-cycle row, so financial income is excluded. 2023 ROE is not shown: the prospectus gives 2023 year-end equity but not 2022.

13 — RESEARCH NOTE

Memory cycle indicators.

The class route requires a panel of cycle indicators. Each row gives the latest reading and its direction for the margin after 2027.

IndicatorLatest readingPeriodSignalSource
DRAM contract pricesConventional DRAM +10–15% q/q forecastQ4 2026Up: supports H2 2026S29 (tracker)
HBM prices2027 outlook revised up2027UpS30 (tracker)
DRAM spot pricesDDR4 1Gx8 flat at $46.326 Oct 2026Flat: spot no longer leads upS54 (tracker)
Supplier inventory123 days of cost of sales, from 136 at end-202530 Jun 2026Falling: tightS1, S2; calculated by us
Customer inventoryUnverified: no named tracker figure found—UnknownSearched trackers S28–S30, S63
Bit supply vs demandSufficiency ratio −1% to −2%; 2027 gap wider2026–27TightS63 (tracker)
Bit supply growth, %Unverified: no numeric forecast found in opened sources2027UnknownS63, S29
HBM share of wafersUnverified as a number; HBM needs more wafer input per bit2026Tightens commodity DRAMS63
Long-term agreement coverAbout ten customers; part of supply under price bandsFrom 2026Supports 2027S45, S46
Capacity commitments₩61.5tn unrecognised, from ₩6.7tn30 Jun 2026Supply response buildingS2
New entrantCXMT 4F² server DDR5 promised by year-endOct 2026Pressure from 2027–28S26, S27

Five rows point to tight supply into 2027. Two point to a supply response after it. The panel supports the shared H2 2026 and 2027 inputs. It does not settle the margin after 2028, which is where the cases differ.

14 — RESEARCH NOTE

What blind review changed.

The review ran in two phases. Phase A closed every input that a source can settle, before any reviewer saw the report. Phase B gave independent reviewers the report and the source list without the conclusion, the case names or our open questions. One reviewer looked only for omissions that could change the conclusion. Others argued the strongest positive and negative case and rechecked numbers against sources. A new resolvable fact found in phase B sent the work back to phase A.

Phase A: facts closed from sources

ItemTypeResult
Tax rateresolvable, closedStatutory 27.5% from FY2026 (25% top bracket + 10% local; EY, Deloitte, NTS). Effective rate H1 2026 22.98% used to 2028; terminal 27.5% − 4.52% credit = 22.98%. Against 24%: 1,237,250 → 1,254,840 KRW.
KIOXIA look-throughresolvable, closedSPC 2 bond = 14.30% of KIOXIA (audited note). Reconciles to reported values within +1.1% (Dec), −5.5% (Mar), +1.3% (Jun, ₩66.08tn moved to Level 2). At 16 Oct: ₩26.1tn; −₩40.0tn pre-tax, -39,758 KRW per share after tax.
KIOXIA conversion termsirreducibleOwnership cap and conversion terms not disclosed; carried as a discount sensitivity (0% to 8.95%).
Discount rateresolvable, closedKTB 10y 4.20% (16 Oct); implied ERP 4.20% (1 Oct 2026); Korea CRP 0.61% (July 2026); beta 1.22 = 5-year weekly ACWI regression, Blume-adjusted (range of four regressions 1.22–1.52). r = 10.07%, from 12.25%.
Beta window and indexjudgementFour regressions shown with their values; choice explained in section 09.
Prices and FXresolvable, closedSeoul close 16 Oct, ADS close 15 Oct, KRW/USD and JPY/KRW 16 Oct from stored series.
Operating beta (returned from round 1)resolvable, closedEquity beta 1.22 scaled by market value / (market value − net cash ₩81.9tn) = 1.34; r 10.64%.
Deferred tax on the KIOXIA mark-down; discount timing (returned from round 2)resolvable, closedRelease capped at the reported ₩7.8tn deferred tax liability; mid-year discounting for annual cash flows (raised in rounds 1 and 2).
Risk-free rate and terminal timing (returned from round 3)resolvable, closedRisk-free = KTB 4.20% less Korea default spread 0.39% = 3.81%; terminal value discounted at 8.71 years to match mid-year flows. r = 10.24%.

Phase B: judgement rounds

RoundMain findingsHow resolvedEffect on value or test
1Equity beta applied to operations while net cash is added separately (omission finder); terminal margin above the cycle mean and the beta index choice (negative case); beta noise, H2 price uplift, RONIC (positive case); ADS premium inputs on 9 Sep and 15 Oct (number check); buyback above value.Returned to phase A: operating beta = equity beta × E/(E − net cash). ADS rows corrected (9 Sep close ₩1,856,000; 15 Oct rate ₩1,342.00). Buyback-above-value row added. Terminal margin, beta index, RONIC and H2 uplift stay judgement with sensitivity rows.Central value moved from ₩1,254,840 to ₩1,181,534 (-5.8%); Seoul price now above central value.
2Year-end discounting (omission finder, also round 1); tax release ₩11.0tn exceeds the ₩7.8tn liability (negative case); terminal margin above the mean, beta choice, permanent tax credit (negative case); RONIC, terminal credit gap, H2 uplift (positive case); drawdown date mismatch and SK square headroom wording (number check).Returned to phase A: mid-year convention; tax release capped at the liability. Prose corrected. Terminal margin, beta index, RONIC, credit persistence and H2 uplift stay judgement with sensitivity rows; H2 resolves on 28 Oct.Central value moved from ₩1,181,534 to ₩1,199,849 (+1.6%); test result unchanged (price above value).
3Risk-free rate includes the sovereign default spread while the country premium is added (positive case); terminal value at year-end against mid-year flows (positive case); Samsung Q3 guidance implies higher H2 (omission finder); beta and terminal margin (negative case); case weights; number check found no material mismatch.Returned to phase A: default spread deducted; terminal timing aligned. H2 stays a sensitivity until the 28 Oct report. Beta, terminal margin, RONIC and weights stay judgement; weights are the reader's calculator.Central value moved from ₩1,199,849 to ₩1,275,044 (+6.3%); Seoul price moved from above to 0.2% below value.
4Terminal margin above the cycle mean and the beta choice (negative case, omission finder); RONIC, terminal credit gap, beta re-levering (positive case); number check matched EV and value per share within 0.02%, with rounding notes on r and required ROE.No new resolvable fact. All remaining items are judgement or future data and sit in sensitivity rows.Central value unchanged at ₩1,275,044; test result unchanged.

Status: provisional. The four-round cap was reached. Rounds 1–3 each found a resolvable fact and returned the work to phase A; round 4 changed nothing, but one unchanged round does not meet the two-round rule.

15 — RESEARCH NOTE

Weak signals.

This chapter holds context that is not evidence. It does not move the cases.

  • A Seoul column argues that memory oversupply starts in 2029. It is opinion.S44
  • A Korean industry figure argues that more capacity lets Korean makers win back price-sensitive share from Chinese suppliers.S50
  • US bonds of a large GPU cloud provider traded near 77 cents on 14 October, according to a market report.S48 Credit stress at one buyer is not a demand fact for HBM.
  • Chief executives of two large chip companies named financing costs as a constraint on AI spending.S47
  • US export-control licences for the Chinese fabs and chip tariffs are listed as risks in the prospectus; we did not size them, and their effect is Unverified.S1
  • SK hynix is reviewing more production bases, including Japan; nothing is decided.S12

16 — RESEARCH NOTE

Evidence register.

Level 1 is a regulator or official dataset, 2 audited or reviewed accounts, 3 company releases, 4 industry trackers, 5 independent press, 6 platform signals. Conclusions rest on levels 1–3; levels 4–6 set context and are graded in the text.

S1
SK hynix Inc., Form 424B4 prospectus for the ADS offering

9 Jul 2026 (filed 10 Jul) · Level 1–2: registered prospectus with audited 2023–2025 and interim Q1 2026 accounts. Retrieved 15–16 October 2026.

S2
SK hynix, Form 6-K: half-year report and interim consolidated statements to 30 June 2026

18 Aug 2026 · Level 2: reviewed interim statements, K-IFRS. Retrieved 15–16 October 2026.

S3
SK hynix, Form 6-K: preliminary Q2 2026 results

29 Jul 2026 · Level 3: provisional results. Retrieved 15–16 October 2026.

S4
SK hynix, Form 6-K: results of paid-in capital increase (ADS shares)

15 Jul 2026 · Level 1: KRX filing furnished to the SEC. Retrieved 15–16 October 2026.

S5
SK hynix, Form 6-K: decision on acquisition of treasury shares

19 Aug 2026 · Level 1. Retrieved 15–16 October 2026.

S6
SK hynix, Form 6-K: shareholder return policy

19 Aug 2026 · Level 1; contains management opinion on value. Retrieved 15–16 October 2026.

S7
SK hynix, Form 6-K: Yongin Fab 2 (Y2) investment

7 Aug 2026 · Level 1. Retrieved 15–16 October 2026.

S8
SK hynix, Form 6-K: M17 fab investment, Cheongju

7 Aug 2026 · Level 1. Retrieved 15–16 October 2026.

S9
SK hynix, Form 6-K: P&T7 packaging plant investment increase

22 Jul 2026 · Level 1. Retrieved 15–16 October 2026.

S10
SK hynix, Form 6-K: Q3 2026 results call date

14 Oct 2026 · Level 1: results on 28 Oct 2026. Retrieved 15–16 October 2026.

S11
SK hynix, Form 6-K: loss on exchangeable-bond derivatives

14 Aug 2026 · Level 1. Retrieved 15–16 October 2026.

S12
SK hynix, Form 6-K: response to inquiry on a Japan facility

18 Sep 2026 · Level 1. Retrieved 15–16 October 2026.

S13
SEC EDGAR filer record, CIK 0002120882 (SIC 3674)

retrieved 15 Oct 2026 · Level 1: identity, SIC code, filing list. Retrieved 15–16 October 2026.

S14
SK hynix newsroom: Q2 2026 business results

29 Jul 2026 · Level 3: earnings release. Retrieved 15–16 October 2026.

S15
SK hynix: FY2022 and Q4 results

31 Jan 2023 · Level 3. Retrieved 15–16 October 2026.

S16
SK hynix: FY2021 and Q4 results

28 Jan 2022 · Level 3. Retrieved 15–16 October 2026.

S17
SK hynix: FY2016 and Q4 results

26 Jan 2017 · Level 3. Retrieved 15–16 October 2026.

S18
SK hynix: FY2017 and Q4 results

25 Jan 2018 · Level 3. Retrieved 15–16 October 2026.

S19
SK hynix: FY2018 and Q4 results

24 Jan 2019 · Level 3. Retrieved 15–16 October 2026.

S20
SK hynix: FY2019 and Q4 results

31 Jan 2020 · Level 3. Retrieved 15–16 October 2026.

S21
SK hynix: FY2020 and Q4 results

29 Jan 2021 · Level 3. Operating profit stated as +84% on 2019; ₩5.01tn is our reading. Retrieved 15–16 October 2026.

S22
Yonhap: SK hynix closes −11.06% at ₩1,262,000; foreign net selling

15 Oct 2026 · Level 5: exchange close and flows as reported. Retrieved 15–16 October 2026.

S23
Seoul Economic Daily: KOSPI falls for a seventh session

15 Oct 2026 · Level 5. Retrieved 15–16 October 2026.

S24
CBS Nocut News: record close ₩2,987,000 and the July drawdown

14 Jul 2026 · Level 5. Retrieved 15–16 October 2026.

S25
Financial Consumer News: shares 58% below the June high

15 Oct 2026 · Level 5; dates the high to 19 June (intraday). Retrieved 15–16 October 2026.

S26
Tom's Hardware: CXMT first 4F² DRAM to be a server DDR5 RDIMM

13 Oct 2026 · Level 5; reports a company statement from 10 Oct. Retrieved 15–16 October 2026.

S27
TrendForce: CXMT accelerates 4F² DRAM push

12 Oct 2026 · Level 4–5: industry tracker. Retrieved 15–16 October 2026.

S28
TrendForce: 2Q26 DRAM revenue ranking

7 Sep 2026 · Level 4: named industry tracker. Retrieved 15–16 October 2026.

S29
TrendForce: 4Q26 memory contract price outlook

30 Sep 2026 · Level 4. Retrieved 15–16 October 2026.

S30
TrendForce: HBM 2027 price outlook revised up

29 Sep 2026 · Level 4. Retrieved 15–16 October 2026.

S31
US Bureau of Labor Statistics: CPI, September 2026

14 Oct 2026 · Level 1. Retrieved 15–16 October 2026.

S32
Federal Reserve: FOMC statement

16 Sep 2026 · Level 1. Retrieved 15–16 October 2026.

S33
Yonhap Infomax: Korean bond market close, 10-year KTB 4.193%

15 Oct 2026 · Level 5: market data as reported. Retrieved 15–16 October 2026.

S34
Yonhap Infomax: bond and FX memo, USD-KRW 1,342.00

15 Oct 2026 · Level 5. Retrieved 15–16 October 2026.

S35
CNBC: AI stocks fall on the largest private lab's revenue report

8 Oct 2026 · Level 5; figures come from unnamed sources. Retrieved 15–16 October 2026.

S36
TechCrunch: annualised revenue about $20bn below the earlier figure

8 Oct 2026 · Level 5; second report of the same disclosure. Retrieved 15–16 October 2026.

S37
Reuters: the second lab's draft prospectus shows losses and compute commitments

28 Sep 2026 · Level 5: prospectus seen by the agency, not public on EDGAR. Retrieved 15–16 October 2026.

S38
ABC News: Firmus withdraws its ASX float

9 Oct 2026 · Level 5; quotes the company statement. Retrieved 15–16 October 2026.

S39
CNBC: Firmus withdraws IPO, sought about US$5bn

9 Oct 2026 · Level 5. Retrieved 15–16 October 2026.

S40
MarketWatch via Morningstar: Korean depository caps conversion at 2.5%

23 Jul 2026 · Level 5; reports a Korea Securities Depository statement. Retrieved 15–16 October 2026.

S41
Seoul Economic Daily: ADSs trade 44% above Seoul shares

10 Sep 2026 · Level 5. Retrieved 15–16 October 2026.

S42
MTN: why the ADS-share arbitrage is blocked

22 Jul 2026 · Level 5. Retrieved 15–16 October 2026.

S43
CNBC: memory stocks hit on China and 2029 oversupply worries

15 Oct 2026 · Level 5. Retrieved 15–16 October 2026.

S44
Maeil Business: column on memory oversupply from 2029

15 Oct 2026 · Level 6: opinion column. Retrieved 15–16 October 2026.

S45
Reuters: Q2 profit misses forecasts; about 10 long-term supply deals

29 Jul 2026 · Level 5. Retrieved 15–16 October 2026.

S46
Korea Herald: long-term agreements with 10 customers; capex plan

29 Jul 2026 · Level 5; reports the earnings call. Retrieved 15–16 October 2026.

S47
CNBC: global AI sell-off on funding worries

15 Oct 2026 · Level 5. Retrieved 15–16 October 2026.

S48
Yonhap Infomax: CoreWeave bond price and circuit breakers in Seoul

15 Oct 2026 · Level 5. Retrieved 15–16 October 2026.

S49
Yahoo Finance: SKHY ADS close and after-hours on 14 Oct

15 Oct 2026 · Level 6: platform report of the 14 Oct close. Retrieved 15–16 October 2026.

S50
Korea Herald: expert interview on oversupply and China share

15 Oct 2026 · Level 5; opinion of the interviewee. Retrieved 15–16 October 2026.

S51
JoongAng Economy News: Q2 2026 average won-dollar rate 1,501.93

21 Sep 2026 · Level 5: market average as reported; the central-bank series was not opened. Retrieved 15–16 October 2026.

S52
Yonhap: chipmaker profit forecasts cut by ₩21tn as the won rises

13 Sep 2026 · Level 5. Retrieved 15–16 October 2026.

S53
Samsung Electronics: Q3 2026 earnings guidance

8 Oct 2026 · Level 3: peer company preliminary results, K-IFRS, unaudited. Retrieved 15–16 October 2026.

S54
TrendForce: memory spot price update, DRAM spot largely sideways

7 Oct 2026 · Level 4: industry tracker. Retrieved 15–16 October 2026.

S55
KIOXIA Holdings: consolidated results for the three months to 30 June 2026

31 Jul 2026 · Level 3: issued shares 548,015,088 at 30 June; 3-for-1 split from 1 Oct 2026. Retrieved 15–16 October 2026.

S56
Market data: daily and weekly closes for 000660, KOSPI, MSCI ACWI ETF, KIOXIA (285A), KRW/USD, JPY/KRW

retrieved 16 Oct 2026 · Level 6: platform price series; stored with this report and used for the regressions and the KIOXIA mark. Retrieved 15–16 October 2026.

S57
Hankyung data centre: 10-year KTB 4.20% on 16 Oct 2026

16 Oct 2026 · Level 5: market data as reported; 15 Oct close 4.193% in S33. Retrieved 15–16 October 2026.

S58
A. Damodaran: implied ERP on 1 Oct 2026 = 4.20%

1 Oct 2026 · Level 4: academic dataset, monthly update. Retrieved 15–16 October 2026.

S59
A. Damodaran: country risk premiums, July 2026 update (Korea Aa2, CRP 0.61%)

1 Jul 2026 · Level 4; the January 2026 web table shows 0.64%. Retrieved 15–16 October 2026.

S60
EY Tax News: Korea enacts 2026 tax reform bill

26 Jan 2026 · Level 4: top bracket 25% for fiscal years from 1 Jan 2026, plus 10% local income tax. Retrieved 15–16 October 2026.

S61
Deloitte: Korea tax highlights 2026

2026 · Level 4. Retrieved 15–16 October 2026.

S62
National Tax Service: corporate tax rates

retrieved 16 Oct 2026 · Level 1: regulator. Retrieved 15–16 October 2026.

S63
TrendForce: DRAM sufficiency ratio −1% to −2% in 2026; 2027 gap to widen

30 Jul 2026 · Level 4. Retrieved 15–16 October 2026.

Boundary. The Seoul price is the 16 October 2026 close; the ADS price is the 15 October close, the last completed US session at cut-off. Figures are in K-IFRS. Q3 2026 results are due on 28 October 2026 and are not included. A company review of the share and ADS conversion limit could change section 06.

APPENDIX

The model in tables.

A1. Annual forecasts, ₩tn

CaseYearRevenueMarginCapexD&AFCFF
Cycle repeatsH2 2026149.174.8%28.78.562.3
Cycle repeats2027196.745.0%55.022.435.6
Cycle repeats2028137.715.0%30.328.914.5
Cycle repeats2029144.620.0%31.829.218.3
Cycle repeats2030153.324.7%33.729.723.4
Cycle repeats2031162.524.7%35.730.523.8
Cycle repeats2032172.224.7%37.931.624.5
Cycle repeats2033182.524.7%40.232.825.3
Cycle repeats2034193.524.7%42.634.326.3
Cycle repeats2035205.124.7%45.135.927.5
Plateau, then normal cycleH2 2026149.174.8%28.78.562.3
Plateau, then normal cycle2027309.165.0%55.022.4116.5
Plateau, then normal cycle2028262.845.0%65.728.954.3
Plateau, then normal cycle2029236.535.0%59.136.340.9
Plateau, then normal cycle2030250.732.0%62.740.837.1
Plateau, then normal cycle2031265.732.0%66.445.241.3
Plateau, then normal cycle2032281.732.0%70.449.545.3
Plateau, then normal cycle2033298.632.0%74.653.649.2
Plateau, then normal cycle2034316.532.0%79.157.853.1
Plateau, then normal cycle2035335.532.0%83.962.157.1
New trend lineH2 2026149.174.8%28.78.562.3
New trend line2027351.372.0%55.022.4148.2
New trend line2028386.462.0%96.628.9109.8
New trend line2029386.452.0%96.642.5100.6
New trend line2030417.345.0%104.353.387.4
New trend line2031450.742.0%112.763.589.9
New trend line2032486.842.0%121.773.3101.9
New trend line2033525.742.0%131.483.0113.9
New trend line2034567.842.0%141.992.7126.0
New trend line2035613.242.0%153.3102.5138.5

A2. Valuation outputs

CaseEV, ₩tnPV of terminal, ₩tnEquity, ₩tnPer sharePer ADS
Cycle repeats392.9189.8520.1₩713,544$53.57
Plateau, then normal cycle802.1402.2929.3₩1,275,044$95.73
New trend line1688.2965.01815.4₩2,490,779$187.00

A3. Base inputs and provenance

InputValueProvenance
Seoul close, 16 Oct 2026₩1,272,000Reported close, market data S56; single source; 15 Oct close ₩1,262,000 also in S22
ADS close, 15 Oct 2026$146.11Reported close, market data S56
KRW per USD, 16 Oct1,331.98Market data S56; 15 Oct morning print ₩1,342.00 in S34
Shares outstanding728.87mReported, S1
H1 2026 revenue / operating profit₩131.9tn / ₩98.2tnReported, S2
Q2 2026 revenue / operating profit₩79.3tn / ₩60.5tnReported, S3
Net non-operating assets₩127.2tnCalculated by us from S2, S4, S55, S56
KIOXIA bond, 16 Oct₩26.1tnCalculated by us: 14.30% (S1) × shares (S55) × price and JPY/KRW (S56)
2026 capex₩47tnManagement range via S46; Unverified exact
Tax rate23.0% to 2028; 23.0% from 2029Calculated by us: effective rate S2; statutory 27.5% S60–S62
Working capital20% of ΔrevenueCalculated by us: receivables plus inventories over annualised Q2 revenue
Risk-free rate3.81%KTB 4.20% (S57) less default spread 0.39% (S59); calculated by us
Beta1.34Calculated by us: 5-year weekly regression on MSCI ACWI, Blume-adjusted, scaled for net cash, S56
ERP / Korea premium4.20% / 0.61%Reported, S58 (1 Oct 2026), S59 (July 2026)
Discount rate10.24%Calculated by us
Terminal growth / RONIC3% / 15%Assumptions