Three Ways to Back AI Hardware: Arm, SK Hynix and AMD
Investors weigh Arm’s high-margin licensing against SK Hynix’s capital-heavy HBM production to assess exposure to growing data-center compute needs.
Overview
- SK Hynix supplies high-bandwidth memory (HBM), a specialized, high-speed memory used to store and move large model data during AI training, which makes it a critical vendor for AI datacenters.
- Arm earns royalties by licensing energy-efficient CPU architectures to chip makers, which gives it high margins and broad volume exposure as cloud operators push for lower-power servers.
- Arm has also begun limited hardware production, a shift that supplements its licensing business but does not replace the core royalty model that drives its profitability.
- AMD designs high-performance processors for servers and gaming and strengthened its infrastructure role through a late-2025 supply partnership with OpenAI that links its chips to large AI deployments.
- The companies represent distinct investment trades: SK Hynix bets on volume and heavy capital investment in memory fabs, Arm offers scalable, low-capex royalties tied to energy efficiency, and AMD sits between design-led performance and direct infrastructure partnerships that drive demand.