SK Hynix Plant Timeline Puts 44.2% Materials Discount in Focus

How SK Hynix's Plant Schedule Changes the Case for Materials Stocks

SK Hynix's new plant schedule does not signal an immediate end to the low valuations of semiconductor materials stocks. Rather, it means the clock has started on determining whether they warrant a rerating. Viewed alongside the valuation gap and ramp-up plans reported by Maeil Business Newspaper's securities desk on 2026-09-30, investors need to distinguish between the valuation gap itself and the earnings evidence that could narrow it.

According to LS Securities, domestic front-end equipment makers trade at a median NTM P/E of approximately 23.6 times based on projected earnings over the next 12 months, versus approximately 13.2 times for materials suppliers. Here, NTM P/E refers to the P/E ratio based on projected earnings over the next 12 months. Materials suppliers currently trade at P/E multiples approximately 44.2% below those of equipment makers.

23.6 Times Versus 13.2 Times: A Gap in the Timing of Expectations

The current gap shows that the market is not pricing the earnings trajectories of equipment makers and materials suppliers at the same pace. In 2025–2026, investment focused more on converting existing production lines for HBM and advanced DRAM than on building new plants. Investors can connect the investment approach during this period with the current gap in multiples to assess which group's earnings expectations were priced in first.

A low P/E alone does not establish that a stock is undervalued. Closing the discount requires observable changes that support future earnings growth. What is currently known is that materials suppliers trade at relatively low P/E multiples and that SK Hynix has laid out its plant schedule. What remains unconfirmed is whether the new plants will actually begin operations and how much materials consumption will increase.

A Wider Valuation Gap Than in Q3 2017

LS Securities reported that equipment makers traded at a P/E of approximately 15.1 times in the third quarter of 2017, versus approximately 13.0 times for materials suppliers, a gap of about 14%. Compared with the current discount of approximately 44.2% for materials suppliers, the valuation gap between the two industry sectors has widened.

This comparison does not mean that the share prices or P/E multiples of materials suppliers must move in a particular direction. The wider gap relative to the past is merely a starting point for discussing potential rerating. Because the data do not indicate the future share prices or P/E multiples of individual materials suppliers, investors should avoid turning an industry-sector median into an investment conclusion about a specific company.

From Yongin Y1 to Cheongju M17 and Yongin Y2

SK Hynix plans to begin operating the first cleanroom at Yongin Y1 in February 2027. The first cleanroom at Cheongju M17 is targeted to open in December 2028, while the first cleanroom at Yongin Y2 is targeted to open in June 2029. Plans and targets are not completed achievements, so actual operations must be verified at each milestone.

This sequence provides a framework for assessing the expected earnings growth of materials suppliers in 2028–2029. If Yongin Y1 begins operations as scheduled, attention will shift to whether the opening targets for Cheongju M17 and Yongin Y2 translate into actual timelines. Confidence in the long-term cycle depends less on any single plan than on whether multiple ramp-up schedules proceed as intended.

Impact on Semiconductor Equipment, Materials and SK Hynix

• Semiconductor materials suppliers: Their median NTM P/E based on projected earnings over the next 12 months is approximately 13.2 times, below that of equipment makers. For this to support a rerating, materials consumption after the new plants begin operating and earnings growth in 2028–2029 must become tangible.
• Domestic front-end equipment makers: Their median NTM P/E on the same basis is approximately 23.6 times. The gap with materials suppliers indicates the scale of expectations already priced in, but the available data are insufficient to determine the future direction of earnings or P/E multiples for individual equipment makers.
• SK Hynix: The schedules for Yongin Y1, Cheongju M17 and Yongin Y2 are benchmarks for testing the industry's earnings expectations. Actual operations and final timing for each plant have yet to be confirmed outcomes.

Milestones Investors Should Monitor

• February 2027: Confirm whether the first cleanroom at Yongin Y1 begins operations as scheduled.
• December 2028: Check progress toward the target opening of the first cleanroom at Cheongju M17.
• June 2029: Monitor whether the target opening of the first cleanroom at Yongin Y2 translates into an actual schedule.
• 2028–2029: Assess separately whether the actual increase in materials consumption and earnings growth at materials suppliers become tangible.

What Could Narrow the Discount on Materials Stocks

LS Securities analyst Jung Woo-sung said that if AI server demand and the shift toward higher-capacity memory continue while new plants begin operations, the risk of new production capacity immediately causing oversupply could be lower than in the past. In his assessment, as confidence in high utilization rates and the long-term cycle grows, the case for maintaining the current discount on materials stocks also weakens.

The bullish scenario is one in which plant schedules remain on track and earnings growth at materials suppliers becomes tangible in 2028–2029. The opposite scenario would involve actual ramp-up dates diverging from plans or no confirmed increase in materials consumption. The inflection point for a rerating of materials stocks is not the low P/E itself, but the moment scheduled cleanrooms translate into actual operations and earnings.

This article was automatically summarized and analyzed based on the original news report. View Original Article (Maeil Business Newspaper Securities)