On Tuesday, Stifel analysts highlighted semiconductor company SK Hynix's plans to increase capital expenditure (capex) in 2025. This follows a substantial increase in 2024, where capex nearly doubled from the previous year. SK Hynix has indicated that the additional spending will be directed towards high bandwidth memory (HBM) and fabrication infrastructure in Korea. For context, industry peer Micron Technology (NASDAQ:MU), which InvestingPro identifies as a prominent player in the Semiconductors industry, has shown strong momentum with 79.8% revenue growth in the last twelve months. Despite the anticipated increase, the company intends to limit the year-over-year rise in capex.
SK Hynix reported a 90% increase in 2024 capex to approximately 16 trillion won (around $11.7 billion), which was in line with market expectations. The company's capex to sales ratio remained at a five-year low in the mid-20s percentage range. For 2025, Stifel analysts anticipate SK Hynix's capex could be around $13 billion, although the company did not provide a specific budget.
The company's outlook for 2025 suggests a subdued bit shipment forecast, with industry bit demand for DRAM and NAND expected to grow in the mid-high teens and low-teens, respectively. These projections represent a slight decrease from previous estimates. SK Hynix also anticipates a more than 10% quarterly decline in Q1 bit shipments, with DRAM and NAND shipments expected to decrease in the low-teens and high-teens, respectively.
Despite these conservative shipment forecasts, SK Hynix remains optimistic about HBM revenue, which increased 4.5 times in 2024. The company expects this growth to continue, projecting a 100% increase in HBM revenue for 2025. According to InvestingPro, the semiconductor sector shows promising signs, with Micron receiving a strong buy consensus from analysts and maintaining healthy liquidity with a current ratio of 2.72. Subscribers can access 8 additional ProTips and comprehensive industry analysis through InvestingPro's detailed research reports, available for over 1,400 US stocks. Equipment spending is believed to be concentrated on the M16 and M15X facilities, with the timing of the M15X expansion being a potential variable affecting wafer fabrication equipment (WFE) spending.
The report suggests that this update could be seen as neutral or slightly disappointing for semicap companies exposed to HBM, such as Applied Materials (NASDAQ:AMAT), Lam Research (NASDAQ:LRCX), Onto Innovation (NYSE:ONTO), and Camtek (NASDAQ:CAMT). The cautious approach to WFE outlook by SK Hynix might temper expectations for these suppliers, even as SK Hynix's investment in fab infrastructure signals confidence in the long-term demand for HBM. For detailed financial analysis and Fair Value assessments of these semiconductor equipment manufacturers, investors can access comprehensive Pro Research Reports through InvestingPro.
In other recent news, Micron Technology completed a $1 billion senior note offering due in 2035 with a 5.80% interest rate. The proceeds from the offering will be used to redeem its outstanding 4.975% Senior Notes due 2026 and for general corporate purposes. In other developments, UBS analyst Timothy Arcuri reiterated a Buy rating on Micron Technology shares, citing strong High Bandwidth (NASDAQ:BAND) Memory (HBM) momentum and technology leadership. Meanwhile, Micron Technology plans to invest $7 billion to expand its manufacturing capacity in Singapore, with the new facility expected to become operational in 2026.
Furthermore, Micron Technology and other US chipmakers are under scrutiny as China begins an investigation into US chip grants and alleged dumping. The probe could potentially lead to increased tariffs or fines. Despite these challenges, Micron's financial health and market position remain strong, with Citi analyst Christopher Danely upholding a Buy rating for Micron Technology, citing a projected turnaround in the DRAM market beginning in 2025. These are the latest developments for the company.
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