Sands Capital Management, LLC - Emerging Markets Growth Composite on SK hynix Inc.
Thesis
SK hynix is one of the fund's largest holdings and a major beneficiary of the memory shortage spreading from high-bandwidth memory into conventional DRAM and NAND. AI inference and agentic workloads are increasing demand across the memory stack while physical limits constrain how quickly the industry can add supply. Management characterizes the shortage as structural and multiyear, with meaningful capacity additions difficult before the second half of 2027. Strong conventional-memory pricing should support earnings revisions and strengthen future HBM negotiations as customers compete for scarce capacity. Despite the share-price advance, the company ended the quarter at less than 10 times forward earnings, which Sands views as attractive given the durability of the earnings cycle.
“SK hynix described the shortage as structural, multiyear, and across products, with meaningful capacity additions difficult before the second half of 2027.”
Key risks
- Meaningful new memory capacity could eventually ease the shortage
- AI-related memory demand or pricing could normalize faster than expected