...July 27, 2023 This report does not constitute a rating action. HONG KONG (S&P Global Ratings) July 27, 2023--SK Hynix Inc.'s high debt and a soft global economy will continue to crimp the company's rating headroom. The Korean semiconductor company's second-quarter results were in line with our expectations, with DRAM prices recovering modestly in the second quarter. The memory chip cycle has shown signs of bottoming on supply cuts among key semiconductor manufacturers. At the same time, destocking to reduce inventory levels within key end segments have improved supply-demand dynamics. Moreover, strong growth in artificial intelligence (AI) related demand, such as the latest generation double data rate (DDR5) and high bandwidth memory (HBM3) chips, raises the odds for a second-half recovery for the firm. We believe SK Hynix (###-/Negative/--) is well positioned to benefit from the growth of AI, based on its product offering. Nevertheless, the company's rating headroom remains tight. Although...
