Key Takeaways
- Shares of SK Hynix climbed 3% during Wednesday’s premarket session, recovering from a 9% decline across the previous five trading days
- The semiconductor maker’s labor union ratified an updated compensation agreement, increasing the cash component of profit-sharing bonuses from 40% to 50%
- Reports indicate SK Hynix has begun preliminary discussions with Intel regarding potential utilization of its forthcoming Ohio chip manufacturing site
- Intel (INTC) shares jumped over 5% in premarket activity following disclosure of the Ohio facility negotiations
- Analysts maintain a Strong Buy consensus on SKHY with a mean price target of $249.70, suggesting upside exceeding 40%
Shares of SK Hynix (SKHY) were changing hands at $180.93, advancing 3.49% during Wednesday’s premarket session, staging a recovery following a 9% retreat across the preceding five trading days.
The rebound followed ratification of a modified profit-sharing package by the company’s workforce union, alleviating worries regarding potential manufacturing interruptions.
According to the updated arrangement, employees will receive profit-sharing bonuses split evenly between cash payments and company equity. This marks a change from the prior proposal that allocated just 40% in cash form.
Approximately 57% of union participants cast votes in favor of the reworked wage and collective bargaining package.
Reaching this agreement proved challenging. Union representatives had turned down a previous offer in August, with slightly more than 50% rejecting the terms. This latest round required an additional two weeks of negotiations.
“We thank the labour union and our employees for working with us throughout this challenging process,” SK Hynix said in a statement.
The arrangement also eliminates any ceiling on profit-sharing bonuses completely. SK Hynix has committed to allocating 10% of its yearly operating profit toward employee bonuses annually over the coming decade.
Should the company experience financial losses, the agreement permits SK Hynix to implement a temporary 3% reduction in employee compensation, with full wages resuming once operations improve.
SK Hynix shares traded on the South Korean exchange also advanced 4% on Wednesday.
Intel Ohio Facility Discussions Renew Investor Interest in SKHY
Reuters disclosed Wednesday that SK Hynix has entered preliminary negotiations with Intel concerning potential use of facilities at Intel’s proposed semiconductor complex in Ohio.
One scenario under consideration involves SK Hynix leasing portions of Intel’s Ohio manufacturing campus. An alternative possibility could include establishing a joint venture incorporating prominent cloud service providers seeking to guarantee memory chip availability.
Both corporations stated that no final determinations have been reached and discussions remain in exploratory phases.
Intel’s Ohio initiative has encountered scheduling setbacks. Originally targeting production commencement in 2025, the dual planned manufacturing plants are currently anticipated to reach completion in 2030 and 2031.
Any arrangement involving sophisticated HBM or DRAM manufacturing capabilities may necessitate assessment by South Korean regulatory authorities, which designate these technologies as strategically significant national resources.
Intel (INTC) shares increased more than 5% in premarket activity, trading at $102.03.
Analyst Sentiment on SKHY
Analysts assign SKHY a Strong Buy consensus rating, supported by 11 Buy recommendations issued during the past three months.
The consensus price target stands at $249.70, indicating potential gains exceeding 40% from current premarket trading levels.
JPMorgan initiated coverage with an Overweight designation and established a $245 price objective on September 10. Needham maintained its Buy recommendation and elevated its target to $220 on August 24. Wolfe Research launched coverage with an Outperform rating and a $200 objective on August 4.
SK Hynix additionally authorized a ₩40 trillion stock repurchase program in August.
SK Hynix (SKHY) shares were trading at $180.93 during Wednesday’s premarket session, according to Benzinga Pro data.
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