SK hynix Inc. shot up to this year's high on Monday, chasing after its historic peak price of 1997 based on a positive earnings outlook for later this year.

SK hynix, the world's second-largest chipmaker, hit a new 52-week high of 48,550 won (US$47.59) in late afternoon trading on the Seoul bourse, flirting with its highest price of 49,600 won recorded on June 19, 1997, when its name was Hyundai Electronics. Its shares closed at 48,350 won, up 2.76 percent from the previous session. The benchmark KOSPI rose 0.14 percent.

SK hynix rallied this year based on strong demands for dynamic random-access memory (DRAM) chips. Its stock jumped about 30 percent this year, becoming the third-largest listed company in the country by value after Samsung Electronics and Hyundai Motor Co.

Analysts say the upward trend is expected to last for a while as the tech giant is poised to benefit from a tight supply of personal computer memory chips and stronger sales of more lucrative mobile chips used by its major client, Apple Inc., maker of iPhones and iPad tablets.

Several investment firms put SK hynix on their preferred stock list in recent weeks, saying its shares will surpass 50,000 won in the second quarter. Shinhan Investment Corp. upgraded its target price to 60,000 won on Monday.

"SK hynix is expected to see a stable demand and supply (of memory chips)," Nam Dae-jong, a senior economist at Hana Daetoo Securities Co., said. "Its profits will continue to improve in the second quarter, following the first quarter."

   Apple sold 43.7 million iPhones in the first quarter that run on SK hynix's chips, surpassing analysts' estimates of 37.7 million after making the iPhone available through China's largest wireless carrier, China Mobile Ltd., earlier this year.

SK hynix saw its net profit surge 348.9 percent in the first quarter from a year earlier on the back of improved sales in DRAM chips and the normalization of production at a Chinese plant stalled from a fire last year.

The company earlier said the rollout of a 4G LTE network in China, the world's biggest smartphone market, is also likely to lift sales of semiconductors for mobile devices.

"SK hynix has continued to outgrow the DRAM industry in both shipments and revenue since 2011 on the back of product mix improvement and smooth technology migration," JJ Park, a tech analyst at JPMorgan Chase & Co., wrote in a June 4 report. "From a valuation standpoint, SK hynix is trading at a discount to its peers despite robust return on equity (ROE) profile and margin metrics... We believe the stock will narrow the gap with its global peers."

SK hynix and its bigger home rival, Samsung Electronics, together account for around 65 percent of the global DRAM market, with U.S. manufacturer Micron Technology accounting for the rest.

It is a dramatic change for SK hynix, which was created out of a merger between Hyundai Semiconductor and LG Semiconductor and became part of the SK Group in 2012.

The chipmaker's shares nosedived to 136 won in March 2003 after it was separated from Hyundai Group and put through restructuring. The company changed its name to Hyundai Hynix in 2003 and stayed in the black for 17 consecutive quarters through the third quarter of 2007, but it succumbed to the global financial crisis in 2008.

This year's DRAM market is back in good shape, industry watchers say. Given that the industry is not easy to enter because of a complicated manufacturing process, the containment in production volume helps keep prices stable, they say. At the same time, there is rising demand from smartphones and tablets overwhelming that from traditional personal computers.

"As long as Samsung and SK hynix maintain stable production, there will be no significant volatility in DRAM prices," Lee Seung-woo, an analyst at IBK Investment & Securities Co., said. "The rising portion of mobile DRAM, which is quickly catching up to PC DRAM, is also a plus for its outlook."

A series of recent mergers and expanding research centers helped push up SK hynix's shares as investors considered them a part of efforts to strengthen its NAND flash capability.

In recent weeks, SK hynix has acquired the firmware arm of Belarus-based Softeq Development FLLC. and the expansion card division of U.S. firm Violin Memory Inc. in a bid to bolster its NAND flash solution business.

The company said it has also expanded its global research and development network to cover the U.S., Italy, Taiwan, and Belarus, noting it plans to continue the expansion to cover Russia and Eastern Europe.

By: DocMemory
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