The market valuation of South Korean memory chip specialist SK Hynix soared above $1 trillion on Wednesday after its share price rose by almost 15%.
The rally put the company's market value at 1.68 trillion won ($1.12 trillion), keeping pace with domestic competitor Samsung Electronics, which passed the trillion-dollar mark on May 6.
US competitor Micron Technology passed the mark on Tuesday, after its share price rose 19% in one day. The rise came after Swiss-based UBS sharply raised its target price.
Explosive demand for AI capacity is driving the increased valuations. Advanced memory chips are essential components in the high-performance systems needed for increasingly complex AI applications.
This demand has led to shortages on the global memory chip market and allowed manufacturers to set their own prices. Bottlenecks are affecting supply for other sectors, such as smartphones, laptops and the automotive sector.
Prices for memory chips doubled over the first quarter, and analysts are predicting a further 63% hike for this quarter, which will lead to record profits. They see a fundamental trend, rather than a short-term bubble.
According to UBS, AI-driven changes to the semiconductor market are likely to support elevated valuations over the long term. Demand for memory chips is expected to outstrip supply through 2028, providing a sustained boost to the sector.
