The race to supply the memory chips powering artificial intelligence has narrowed to two primary contenders: South Korea's SK Hynix and US-based Micron Technology. As the so-called AI memory supercycle accelerates, both companies are vying for contracts with Nvidia and other major AI chip designers, but their strategies and market positions differ markedly.
SK Hynix currently holds a commanding lead in High Bandwidth Memory (HBM), a critical component for AI accelerators. The company began mass production of its fifth-generation HBM3E chips earlier this year and has secured long-term supply agreements with key clients. Analysts at Bernstein note that SK Hynix controls roughly 50% of the HBM market, giving it pricing power and stable revenue visibility through 2027.
Micron, however, is not standing still. The company has announced plans to invest $15bn in new fabrication facilities in the US and Japan, targeting HBM3E production by late 2026. Micron's chief business officer stated that the firm expects to capture a 20-25% share of the HBM market within two years. This aggressive expansion has put pressure on SK Hynix to maintain its technological edge, with both companies racing to shrink node sizes and improve memory bandwidth.
For UK investors, the implications are significant. The FTSE 100 has limited direct exposure to these chipmakers, but many London-listed technology funds and ETFs hold significant positions in both stocks. Shares in SK Hynix have risen 68% year-to-date, while Micron has gained 42%, reflecting investor confidence in the AI memory cycle. However, analysts at Citi warn that a potential oversupply in 2027 could compress margins, as both companies bring new capacity online simultaneously.
From a sector perspective, the memory chip market is notoriously cyclical. The current AI-driven demand surge has lifted prices, but history suggests that rapid capacity expansion often leads to a downturn. UK pension schemes with allocations to global technology equities may see short-term gains, but should brace for volatility as the supercycle matures.