Friday charts: Gods of memory

SK Hynix, the South Korean maker of DRAM memory chips, allocates a generous 10% of its operating profits to its bonus pool. 

With business booming, that’s estimated to work out to an average bonus of about $477,000 for each of its 34,500 employees. Barring sudden setbacks, next year’s bonus could be close to $1 million.

SK Hynix pays bonuses in cash, not shares.

This will reshape South Korea’s finances. In each of the next few years, SK Hynix is likely to pay at least $30 billion in corporate taxes. South Korea’s national debt is only $900 billion.

It’s reshaping the social scene in Korea, too.

Matchmakers say employees at SK Hynix have risen to the top of the dating pool. A vest with the company logo has become “the ultimate blind date outfit” and Korea’s “hottest status symbol.” An SNL skit labeled the company’s employees “Hynix gods.”

This is an unexpected turn of events.

DRAM is a commodity product typically mired in a state of severe oversupply: it’s the most cyclical part of the famously cyclical semiconductor industry. This has made it a terrible business to be in for most of history.

In 2001, Hynix had to be rescued from the brink of bankruptcy by its creditor banks. Several attempts to sell the company subsequently failed before SK Group finally bought it at a distressed price in 2012. As recently as 2023, the company posted a loss of 7.7 trillion won.

Things couldn’t look much more different today. The company’s expected to make a profit of as much as 80 trillion won this year. Next year should be even better.

Probably the year after that, too, because DRAM is suddenly one of the scarcest resources in the AI ecosystem.

Training or running a large language model involves constantly moving huge matrices of numbers between DRAM memory chips and compute chips like Nvidia’s GPUs. To speed this process up, Nvidia packages its GPUs alongside stacks of DRAM on a single module (an accelerator).

The stacks of DRAM are known as high-bandwidth memory, or HBM. SK Hynix was the first to make them, way back in 2013. 

That didn’t always seem like a good bet. An SK Hynix executive recalled that as recently as 2019 the company considered its investment in HBM a "headache.” The stacked chips, he added, seemed almost "obsolete."

In 2026, however, they’re mission critical. Without HBM, the world’s GPUs would spend much of their time waiting for data to arrive so it can perform its calculations.

Investors have noticed, of course. Shares of SK Hynix are up about 2,000% since 2019.

There are reasons to think it won’t last. Buyers of DRAM are determined to figure out how to use less of it, for example. China is investing heavily in expanding production, which is already starting to come online.

And DRAM is still a commodity — even if stacking them into HBM does get pretty complex.

No one knows that better than its long-suffering manufacturers. SK Group Chairman Chey Tae-won recently warned that SK Hynix's operating profit of $100 billion could quickly turn into a $100 billion loss. 

Investors are betting that won’t happen for another two or three years, at least.

Inevitably, though, the Hynix Gods will become mere mortals again.

AI investors should hope it's not anytime soon.

Let’s check the charts.

The government windfall:

Over just the next three years, corporate taxes paid by just SK Hynix and Samsung (South Korea’s other maker of DRAM) might equal roughly half of South Korea’s government debt. Or more, I’d guess. Add in taxes on all those bonuses and on capital gains, too, and the debt might be wiped out entirely.

$41 billion!

Micron — the only US maker of DRAM — is expected to be the most profitable company in US tech next quarter.

One company’s revenue is another’s costs.

Memory producers added about $493 billion of market cap after Micron’s bumper results on Wednesday. The market value of their customers was down about the same.

Not just potatoes:

Who’d have guessed that Boise, Idaho would have a trillion-dollar company before New York City? Micron is now worth $1.3 trillion dollars. New York’s best, JP Morgan, weighs in at just $880 billion.

Emerging Seven > Mag 7?

SK Hynix is one of seven companies driving an estimated 49% earnings growth in emerging stock markets. Earnings for the US market are expected to be up just 23%.

The US is all-in on AI:

US hyperscalers are outspending their Chinese counterparts roughly 10 to one.

The agentic era of AI:

Citing data from a new paper showing the booming use of agentic AI, Ethan Mollick says “the chatbot era is over.” Shares of SK Hynix and Micron are up so much because the new agentic era requires so much more memory. 

Invest in them all?

Pokemon cards have vastly outperformed the S&P 500 over the past year. Just wait until the Hynix Gods start spending their bonuses.

Leading indicator:

Contract prices for Nvidia’s H100 GPU have been rising, defying expectations of fast depreciation. Slower depreciation means profits will stay higher for longer for hyperscalers.

And for the gods of memory, too.

Have a great weekend, divine readers.

— Byron Gilliam