Nvidia and SK Hynix: A Memory Deal That Changes Everything

Nvidia and SK Hynix signed the largest memory deal in history. SK Hynix will supply high bandwidth memory (HBM) to Nvidia, and its subsidiary SK Telecom will build a 2-gigawatt AI cloud data center in Korea using Nvidia's Vera Rubin platform. The two companies will also co-develop future generations of AI memory.

HBM is a critical bottleneck in AI infrastructure. GPUs and AI chips need HBM to reduce latency and improve power efficiency. As AI inference grows, fast memory access becomes even more important than raw compute power.

Increasing HBM capacity is challenging. It requires EUV lithography machines from ASML, which are in limited supply. HBM also needs three times the wafer capacity of regular DRAM and massive clean rooms that take years to build.

This deal locks up a massive amount of HBM supply for Nvidia and gives SK Hynix long-term revenue visibility. It's a win-win that strengthens both companies' positions in the AI market.

For Nvidia, securing HBM supply is a massive competitive advantage. It already dominates AI training with its CUDA platform, and this deal helps it lead in inference too. By pairing HBM with its new LPUs from Groq, Nvidia can handle both prefill and decode phases efficiently, reducing latency.

In a capacity-constrained HBM market, having guaranteed supply while competitors scramble is a huge moat. Nvidia's forward P/E of 15x for fiscal 2028 looks attractive given its growth prospects.

For SK Hynix, this partnership cements its status as Nvidia's top HBM supplier. Long-term contracts provide revenue visibility and de-risk its capital expenditure expansion. With a forward P/E under 6, the stock has room for multiple expansion.

Other chipmakers like Broadcom are already securing HBM supply from Samsung, which will keep DRAM capacity tight and prices high. This deal sets the stage for both Nvidia and SK Hynix to be big winners over the next few years.