Micron and SK hynix battle for AI memory dominance as margins tighten

SK hynix and Micron Technology are locked in a fierce competition for dominance in the high-bandwidth memory (HBM) market, a critical component for artificial intelligence infrastructure and NVIDIA’s graphics processing units. While SK hynix currently holds a commanding 58% market share, Micron has reported superior gross and operating margins, signalling a shift in the competitive landscape of the memory industry.

SK hynix established its lead through early investment, beginning HBM development in 2009. This head start allowed the South Korean manufacturer to secure preferred supplier status with major customers like NVIDIA. The company recently completed the world’s first HBM4 development, a technology expected to deliver twice the bandwidth and 40% greater power efficiency than previous generations. This strategic positioning has driven triple-digit year-over-year revenue growth, prompting Moody’s to upgrade SK hynix’s credit rating from Baa1 to A3.

Conversely, Micron has leveraged disciplined manufacturing and a balanced portfolio to close the gap. In its fiscal third quarter, Micron reported data centre revenue exceeding $25 billion, representing an annualised run rate of over $100 billion. The company achieved a gross margin of 84.6% and an operating margin of 80.4%, outperforming SK hynix’s 83% gross and 76% operating margins for the same period.

Micron’s strategy relies heavily on long-term customer agreements to mitigate the cyclical nature of the memory business. The company has signed 16 Strategic Customer Agreements, typically running for five years, to lock in future DRAM and NAND volume. Additionally, Micron has begun volume shipments of HBM4 for the NVIDIA Vera Rubin platform and is developing HBM4E, with high-volume production expected in 2027.

The competitive dynamic is further defined by geography and supply chain resilience. As the only HBM supplier based in the United States, Micron benefits from potential federal incentives and easier integration into the local supply chain of hyperscalers. While SK hynix faces exposure to geopolitical friction and manufacturing risks in China, Micron’s US-based operations provide a distinct advantage in securing durable revenue visibility amidst tight global supply conditions.