Concentration That Fell Without Anyone LeavingNarrow moat

SK hynix (SKHY) — moat facet

The largest customer went from 27.3 percent of revenue to 13.4 percent while buying 62 percent more -- which is what a tripling denominator does, and it will run backwards just as fast.

It would be easy to read SK hynix's most recent concentration figures as reassuring. The two largest customers were 14.8% and 12.4% of revenue in the first quarter of 20261, against a single customer at 23.9% for the prior year2. Concentration, apparently, halved.

Largest customer, first half of the year₩10.9TH1 2025 revenue₩17.6TH1 2026 revenue27.3%H1 2025 share13.4%H1 2026 shareBought about 62% more, and halved as a percentage. The denominator tripled.
Falling concentration during an acceleration is neutral information, not good news.

Almost certainly nothing of the sort happened, and the half-year figures show why. The largest customer supplied ₩10,890,639 million of revenue in the first half of 2025, or 27.31%, and ₩17,608,702 million in the first half of 2026, or 13.35%3 — it bought roughly 62% more and halved as a percentage. Quarterly revenue went from ₩52,576.3 billion in the first quarter of 2026 to ₩79,318.7 billion in the second4 — a business growing at that rate produces a denominator that outruns any individual customer, and a percentage that falls while the underlying purchase order rises.

This is the general hazard with concentration ratios in hypergrowth, and it runs in both directions: the same arithmetic that flatters the figure today will punish it the moment growth stops, because the ratio will jump without any customer changing behaviour at all.

The useful measure is absolute, not relative — how much a given customer bought, and whether it bought more than last quarter. SK hynix does not disclose that.

What the investor can do instead is read the ratio in the opposite direction from the obvious one. Falling concentration during an acceleration is neutral information. Rising concentration during the same acceleration would be genuinely alarming, because it would mean the growth is coming from one place.

Moat trajectory: Holding steady

The ratio fell from 27.31% to 13.35% because the denominator tripled, not because anyone bought less — the same customer bought about 62% more. Nothing about the underlying dependence moved.

The number that tests this moat
Reported
Largest customer, H1 2025 against H1 2026
27.31% then 13.35% — while buying 62% more

₩10,890,639 million became ₩17,608,702 million as the denominator tripled. Falling concentration during an acceleration is neutral information; the same arithmetic will run backwards the moment growth stops, without any customer changing behaviour. Read the absolute figure, not the ratio.

Source: SK hynix semi-annual report to 30 June 2026 (SEC Form 6-K) ↗
References
  1. ReportedThe two largest customers were 14.8% and 12.4% of revenue in the first quarter of 2026.
    SK hynix Inc., Form 424B4 prospectus — risk factors and the offering (SEC, CIK 2120882). 'A substantial portion of our sales is attributable to a limited number of customers located in the United States and China. Our two largest customers represented 14.8% and 12.4%, respectively, of our total revenue in the first quarter of 2026 and our largest customer represented 23.9% of our total revenue in 2025.' DRAM products were 77.3% of total sales in Q1 2026 and 77.1% in 2025; NAND flash 22.0% and 21.3%. NAND mass production is transitioning from 176-layer technology to 238- and 321-layer technologies. The offering was 177,900,000 ADSs at US$149.00 each, representing 17,790,000 common shares against 712,702,365 outstanding, each ADS one-tenth of a share; Baillie Gifford Overseas, funds managed by Coatue Management and Situational Awareness Partners indicated a non-binding interest of up to US$7 billion. — FY2025 and Q1 2026 · publ. 2026-07-10 · source ↗
  2. ReportedThe largest customer was 23.9% of revenue for 2025.
    SK hynix Inc., Form 424B4 prospectus — risk factors and the offering (SEC, CIK 2120882). 'A substantial portion of our sales is attributable to a limited number of customers located in the United States and China. Our two largest customers represented 14.8% and 12.4%, respectively, of our total revenue in the first quarter of 2026 and our largest customer represented 23.9% of our total revenue in 2025.' DRAM products were 77.3% of total sales in Q1 2026 and 77.1% in 2025; NAND flash 22.0% and 21.3%. NAND mass production is transitioning from 176-layer technology to 238- and 321-layer technologies. The offering was 177,900,000 ADSs at US$149.00 each, representing 17,790,000 common shares against 712,702,365 outstanding, each ADS one-tenth of a share; Baillie Gifford Overseas, funds managed by Coatue Management and Situational Awareness Partners indicated a non-binding interest of up to US$7 billion. — FY2025 and Q1 2026 · publ. 2026-07-10 · source ↗
  3. ReportedCustomer A supplied ₩10,890,639m (27.31%) of revenue in the first half of 2025 and ₩17,608,702m (13.35%) in the first half of 2026.
    SK hynix Inc., semi-annual business report for the six months to 30 June 2026 (SEC Form 6-K, 18 August 2026) — 'The Company determines supply volumes and prices on a monthly and quarterly basis by mutual agreement with major customers, and there is no order backlog based on long term supply contracts.' Total equity W 262,693,228 million at 30 June 2026 against W 120,666,751 million at 31 December 2025; cash and cash equivalents, short-term financial instruments and short-term investment assets W 87,957,923 million against W 34,942,253 million; total borrowings W 18,586,634 million against W 22,247,905 million; debt-to-equity 32.80%, net borrowing ratio not disclosed because it is negative. For the six months to 30 June 2026, revenues of W 17,608,702 million (13.35%) and W 17,187,421 million (13.03%) were derived from external Customers A and B respectively; for the six months to 30 June 2025, W 10,890,639 million (27.31%) came from Customer A. IDC market share: DRAM 29.9% in 2023, 33.4% in 2024, 34.8% in 2025 and 29.1% in Q1 2026; NAND 19.6%, 21.4%, 20.9% and 18.5%. Gartner's world DRAM market: US$78.7bn in 2022 (-15.4%), US$49.9bn in 2023 (-36.5%), US$91.6bn in 2024 (+82.7%) and US$146.9bn in 2025 (+60.0%). Announced investments include approximately W 15 trillion for M15X in Cheongju, approximately W 19 trillion for the P&T7 advanced packaging plant and W 21,608.1 billion for Yongin, against long-term plans of roughly W 600 trillion for the Yongin cluster and W 100 trillion for Cheongju. The company developed the world's first 321-layer QLC NAND. China's State Administration for Market Regulation cleared the Intel NAND acquisition conditionally, obliging the group to maintain a reasonable pricing policy, increase production and support the entry of third-party competitors into the Chinese eSSD market for five years from December 2021. — six months to 30 June 2026 · publ. 2026-08-18 · source ↗
  4. ReportedQuarterly revenue went from ₩52,576.3bn to ₩79,318.7bn.
    SK hynix Inc., preliminary results of operations for the second quarter of 2026 (SEC Form 6-K, 29 July 2026) — revenue W 79,318,746 million, up 50.9% on Q1 2026's W 52,576,287 million and 256.8% on Q2 2025's W 22,231,952 million; operating profit W 60,542,608 million, up 61.0% sequentially and 557.2% year on year, an operating margin of about 76%; profit before income tax W 122,708,355 million; profit for the period W 93,922,593 million. First-half 2026 revenue W 131,895,033 million, operating profit W 98,152,891 million and profit W 134,268,502 million. Prepared on a consolidated basis under K-IFRS and unaudited. — Q2 2026 (quarter ended 30 June 2026) · publ. 2026-07-29 · source ↗
Sources
Generated September 23, 2026