Key Highlights
- SK Hynix shares jumped 3% during Wednesday’s premarket session, recovering from a five-day decline of 9%
- Labor union members ratified an improved profit-sharing arrangement that increases cash bonuses from 40% to 50%
- The memory chipmaker is reportedly engaged in preliminary discussions with Intel regarding potential use of Ohio semiconductor facility space
- Intel (INTC) shares climbed over 5% premarket following reports of the Ohio fab discussions
- Analysts maintain a Strong Buy consensus on SKHY with a mean price target of $249.70, suggesting upside potential exceeding 40%
Shares of SK Hynix (SKHY) traded at $180.93 during Wednesday’s premarket session, climbing 3.49% as the stock rebounded from a nine-percent decline recorded across the previous five trading days.
The upward movement followed ratification of a renegotiated profit-sharing arrangement by the company’s labor union, alleviating worries about potential manufacturing interruptions.
The updated agreement stipulates that profit-sharing bonuses will be distributed equally between cash and company equity. This marks a shift from the previous proposal that allocated just 40% to cash payments.
Approximately 57% of union participants cast votes in favor of the modified wage and collective bargaining package.
Reaching consensus proved challenging. An earlier version of the proposal was turned down by union members in August, when slightly more than half voted in opposition. This latest agreement 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 ratified agreement also eliminates any ceiling on profit-sharing bonuses. SK Hynix has committed to allocating 10% of its yearly operating profit toward employee bonuses annually over the next decade.
Should the company experience financial losses, the arrangement permits SK Hynix to implement a temporary 3% reduction in employee compensation, with full salary levels reinstated when business conditions improve.
Shares of SK Hynix trading on South Korean exchanges advanced 4% on Wednesday as well.
Intel Ohio Facility Discussions Spotlight SKHY
Reuters disclosed Wednesday that SK Hynix has entered preliminary negotiations with Intel concerning potential utilization of space at Intel’s forthcoming semiconductor complex in Ohio.
One scenario under consideration involves SK Hynix leasing a portion of Intel’s Ohio campus. An alternative possibility includes establishing a joint venture with participation from major cloud computing companies seeking to guarantee memory chip availability.
Both corporations emphasized that no final determinations have been reached and discussions remain in exploratory phases.
Intel’s Ohio initiative has already encountered scheduling setbacks. Originally slated for production launch in 2025, the two planned manufacturing plants are now projected for completion in 2030 and 2031.
Any arrangement involving cutting-edge HBM or DRAM technology would likely necessitate examination by South Korea’s government, which designates these technologies as strategically important national resources.
Intel (INTC) shares advanced more than 5% during premarket trading, reaching $102.03.
Analyst Outlook on SKHY
Street analysts assign SKHY a Strong Buy consensus rating, derived from 11 Buy recommendations issued during the past three months.
The consensus price target stands at $249.70, implying potential appreciation exceeding 40% from current premarket price levels.
JPMorgan initiated coverage with an Overweight designation and $245 price objective on September 10. Needham maintained its Buy recommendation while lifting its target to $220 on August 24. Wolfe Research launched coverage with an Outperform rating and $200 target on August 4.
SK Hynix additionally authorized a ā©40 trillion share repurchase program in August.
SK Hynix (SKHY) shares traded at $180.93 during Wednesday’s premarket session, per Benzinga Pro data.
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