Bollywood Fever: South Korea’s SK Hynix achieved its highest quarterly profit since 2018, driven by robust demand for AI chips, including high bandwidth memory (HBM) used in generative AI chipsets. The Nvidia supplier, the world’s second-largest memory chipmaker, posted a profit for the third consecutive quarter following losses last year.
For the April-June quarter, SK Hynix reported an operating profit of 5.47 trillion won ($3.96 billion), compared to a loss of 2.9 trillion won a year earlier. This marks the highest profit since the third quarter of 2018, aligning with expectations from LSEG SmartEstimate. Revenue surged by 125% year-on-year to a record high of 16.4 trillion won.
SK Hynix has capitalized on the AI-driven demand for high-end chips and enterprise solid-state drives (eSSDs), leveraging its early entry and significant investments in these segments. The company leads the HBM market, supplying chips to Nvidia, and has faced competition from U.S. rival Micron and domestic giant Samsung Electronics. Nvidia, which commands about 80% of the AI chip market, received initial shipments of SK Hynix’s fifth-generation HBM chips, known as HBM3E, which began mass production in March.
Chief Financial Officer Kim Woohyun emphasized the company’s strong position in AI memory products and its stable financial structure. “The company will further solidify the position as a leader in AI memory products,” he said in a statement.
Explosive demand for high-end DRAM chips, such as HBM and chips used in data center servers and AI-enabled gadgets, has driven up chip prices. HBMs could account for 20% of SK Hynix’s DRAM profits by the end of 2024, according to Shinhan Securities, as Nvidia accelerates plans for next-generation GPUs to meet the surging demand from the AI boom.
In May, SK Hynix CEO Kwak Noh-Jung revealed that the company’s HBM chips were sold out for the current year and nearly sold out for 2025.
As a top stock pick in South Korea for the AI boom, SK Hynix shares have risen 47% year-to-date.
Key Highlights:
- Profit and Revenue: SK Hynix reported 5.47 trillion won in operating profit for Q2, the highest since Q3 2018, with a 125% year-on-year revenue increase to 16.4 trillion won.
- AI Chip Demand: The company’s early investments and leading position in high bandwidth memory (HBM) and enterprise solid-state drives (eSSDs) have paid off amidst soaring AI chip demand.
- Market Leadership: SK Hynix leads the HBM market, supplying Nvidia, and competes with Micron and Samsung Electronics.
- Future Outlook: HBMs are expected to significantly contribute to SK Hynix’s profits, with chips sold out for 2023 and nearly sold out for 2025.
($1=1,380.3400 won)
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