​[Industry Introduction for Stock Beginners] Samsung Electronics & SK Hynix: Understand Why They’re Surging Before You Invest

​Samsung Electronics and SK Hynix account for 40% of the total market capitalization of the KOSPI. Over the past year, their stock prices have skyrocketed by 303.85% and 574%, respectively. You’ve probably heard that this is "thanks to the AI Super-Cycle." However, surprisingly few people understand exactly what that means or why it has driven these stock prices so high. It’s actually quite simple. Just keep this structure in mind:
​'Samsung/Hynix → NVIDIA → Microsoft/Meta/Google/Amazon'

​1. The Top of the AI Cycle: Microsoft, Meta, Google, and Amazon
​We are living in an era where everyone uses AI. To use AI, a massive amount of computation and data processing is required. When you send a request to ChatGPT, your smartphone doesn't process it directly. Your request travels through the internet to a massive "computer factory" called an AI Data Center located somewhere in the world. The giant servers in that factory handle the complex calculations and recording on behalf of your phone.
​The companies building the world’s largest AI data centers are Microsoft (ChatGPT), Meta, Google (Gemini), and Amazon. These four are called "Hyperscalers." Inside these data centers, tens of thousands of servers are lined up, performing countless calculations every second.
​The heart of these calculations is NVIDIA’s AI GPU (Graphics Processing Unit). Hyperscalers are pouring astronomical amounts of money into buying NVIDIA's GPUs to "jam" them into their data centers. An AI GPU consists of a GPU in the center surrounded by HBM (High Bandwidth Memory). No matter how brilliant the GPU is, it’s useless if the "ingredients" (data) aren't delivered at the speed of light. The partner that delivers and remembers those ingredients at ultra-high speed is the HBM made by Samsung and SK Hynix. Usually, one AI GPU requires 6 to 8 HBM units.
​In short: HBM made by Samsung/Hynix goes into NVIDIA GPUs, and NVIDIA GPUs go into the hyperscalers' data centers. As global AI usage grows, HBM demand explodes, and the earnings of Samsung and Hynix grow along with it.

​2. What Exactly is HBM?
​HBM is a semiconductor made by stacking multiple layers of DRAM. Think of DRAM as a "desk" where the computer places the work it needs to handle immediately. If the GPU is a fast-handed technician performing calculations, DRAM is the "workspace" next to the technician.
​The difference between DRAM and HBM is like the difference between a single-story shop and a super-tall skyscraper. By stacking dozens of floors on top of a single-story building, you can fit more people and create more value on the same plot of land. Similarly, stacking DRAM into HBM is dozens of times more efficient for memory and computation than a single DRAM.
​To move between floors in a skyscraper, you need elevators. HBM is the same. To exchange electrical signals between DRAM layers, copper wires called TSV (Through Silicon Via) are drilled through them.
​As generations progress, HBM is stacked higher. Starting with the world's first HBM1 (4-layers) by SK Hynix in 2013, it evolved through HBM2, HBM2E, HBM3, and HBM3E. The "E" stands for Extension or Expansion. Currently, we have the 6th generation, HBM4, which stacks 12 to 16 layers. Samsung Electronics achieved mass production of this for the first time in the world this February.
​HBM has become a "seller's market." Demand is exploding, but only three companies in the world make it: Samsung, SK Hynix, and Micron (USA). Since Micron hasn't yet matched the technical prowess of the Korean giants, Samsung and Hynix hold 70-80% of the market. Consequently, even if they double the price, Big Tech companies have no choice but to buy it. Suppliers now dictate the price, leading to an explosion in profits.

​3. Surging Profits, Soaring Stock Prices
​Samsung’s operating profit in Q1 of this year alone reached 57.23 trillion KRW, surpassing its entire annual profit of last year (43.6 trillion KRW) in just three months. SK Hynix also recorded 37.61 trillion KRW in Q1, catching up rapidly to last year's total annual profit of 47.2 trillion KRW.
​Many still perceive Samsung as a company focused on smartphones and home appliances. However, in Q1, those sectors accounted for only 3 trillion KRW of the profit. 53.7 trillion KRW came from semiconductors. While appliances sell a lot, their profit margin is only 6%. Semiconductors, on the other hand, have a profit margin of 66%. This is why Samsung is betting its life on memory.
​Currently, Samsung and Hynix are building massive factories in Pyeongtaek, Icheon, and Yongin to meet global demand. Analysts are continuously raising their profit forecasts. Just a month ago, the estimate for Samsung's annual profit was 203 trillion KRW; as of the 1st of this month, it has soared to 317 trillion KRW.
​It is a rosy future indeed. Securities firms expect Samsung’s stock to reach 300,000 KRW and Hynix to reach 2 million KRW. (Current prices: Samsung 220,500 KRW / Hynix 1,286,000 KRW).

​But will this Super-Cycle last forever? What if the four hyperscalers decide "enough is enough" and cut their investment? I will cover this in the next post. Here’s a hint: Samsung's operating profit growth is projected to turn negative starting in 2028.

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Semiconductors Aren’t Made Alone… “Materials, Parts, and Equipment” Are Essential. ① Who Are the Representative Equipment Companies?

Let’s review what we covered last time. HBM (High Bandwidth Memory) made by Samsung Electronics and SK hynix goes into Nvidia’s AI GPUs. Nvidia’s AI GPUs are needed in hyperscalers’ data centers. As hyperscalers increase their investment in AI, demand for HBM from Samsung Electronics and SK hynix rises, and both companies’ earnings grow. In other words, the memory semiconductor supercycle follows the structure of “Samsung Electronics · SK hynix → Nvidia → hyperscalers.” But beneath Samsung Electronics and SK hynix, there are numerous other companies connected. These are the so-called “materials, parts, and equipment” companies, or “MPE (SoBuJang in Korean).” They supply the materials, parts, and equipment needed to produce HBM. Let’s look at an example. As mentioned before, HBM is made by stacking multiple DRAM chips. Obviously, you can’t just stack DRAM like Lego blocks and call it HBM. You need to press them together using equipment called a “bonder” (Bonder comes from the word “bon...
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