SK Hynix Posts Record Quarterly Profit on Strong Demand for Advanced Chips

SK Hynix Reports Record Quarterly Profit on Strong Demand for Advanced Chips

SEOUL (Reuters) – South Korea’s SK Hynix announced on Thursday that it had achieved a record quarterly profit, driven by robust sales of its advanced chips. The company also stated that demand for high-bandwidth memory (HBM) chips is expected to continue to outpace supply in the coming year.

Despite concerns in the market about an oversupply of chips used in generative AI chipsets, SK Hynix remains confident in the limited production of higher-margin HBM chips due to technological challenges. The company emphasized that demand for these chips is stronger than anticipated.

Kim Kyu Hyun, SK Hynix’s head of DRAM marketing, stated during a conference call, “We believe that it is premature to talk about demand slowdown for AI chips and HBM at this point,” citing the ever-increasing need for computing power.

The world’s second-largest memory chipmaker reported an operating profit of 7 trillion won ($5.07 billion) for the July-September quarter, a significant improvement from a 1.8 trillion won loss a year earlier. This exceeded the average forecast of 6.8 trillion won by LSEG SmartEstimate.

SK Hynix highlighted the exceptional growth in HBM sales, which increased by more than 70% from the previous quarter and over 330% from the same period last year. The company’s revenue for the quarter rose by 94% year-on-year to 17.6 trillion won.

Analyst Ko Yeongmin from Daol Investment & Securities praised SK Hynix’s competitive edge in the HBM market, predicting continued success in the coming year. The company’s shares were trading up 1.4% following the announcement.

SK Hynix has outperformed competitors Samsung Electronics and Micron Technology in recent quarters, benefiting from the growing demand for high-end memory chips driven by AI applications. The company’s shares have surged by 38.5% this year, while Samsung’s stock has declined by 24.7%.

Looking ahead, SK Hynix anticipates that HBM sales will account for 40% of its total DRAM revenue in the fourth quarter, up from 30% in the third quarter. The company expects further growth in memory chip demand for AI servers as global tech companies continue to develop generative AI.

Capital spending for the year is projected to be in the mid-to-high 10 trillion won range, with a slight increase expected in 2025. CFO Kim Woo Hyun highlighted the increasing competition in artificial intelligence research, which will drive demand for servers to train the technology in the future.

Last month, SK Hynix announced the mass production of HBM3E 12-layer chips and plans to supply the latest products to customers by the end of the year. In contrast, rival Samsung recently warned of lower-than-expected third-quarter profits, attributing the disappointing performance to challenges in supplying high-end chips.

($1 = 1,379.9600 won)

(Reporting by Heekyong Yang, Hyunjoo Jin, and Joyce Lee; Editing by Muralikumar Anantharaman and Sonali Paul)