Written by Heekyong Yang, Hyunjoo Jin, and Joyce Lee
South Korean semiconductor giant, SK Hynix, announced on Thursday that it had achieved a record-breaking quarterly profit. This surge in revenue was primarily driven by robust sales of their advanced chips, which are supplied to Nvidia. The company also projected that the demand for its high-bandwidth memory (HBM) chips will continue to exceed the supply next year.
SK Hynix dismissed any market fears regarding a surplus of chips used in generative AI chipsets. The company stated that the production of high-margin HBM chips has been constrained due to technical hurdles, but the demand for these chips has been stronger than anticipated.
“At this stage, it would be premature to discuss a decrease in demand for AI chips and HBM,” said Kim Kyu Hyun, the head of DRAM marketing at SK Hynix. He referenced the ever-growing need for computational power as a reason for this.
SK Hynix, the world’s second-largest memory chipmaker, reported an operating profit of 7 trillion won ($5.07 billion) for the third quarter of this year, a stark contrast to the loss they faced during the same period last year. This figure exceeds the average forecast of 6.8 trillion won by the LSEG SmartEstimate.
SK Hynix has outshined its competitors Samsung Electronics and Micron Technology in recent quarters, due to the rising demand for high-end memory chips driven by AI technology. This advantage is a result of SK Hynix’s early entry and substantial investments in HBM chip development.
SK Hynix reported that HBM sales have seen a significant increase, up by more than 70% from the previous quarter. The company’s total revenue for the quarter also increased by 94% compared to the previous year, reaching a total of 17.6 trillion won.
“SK Hynix has solidified its leading position in the HBM market, and this dominance is likely to continue into the next year,” said analyst Ko Yeongmin from Daol Investment & Securities.
SK Hynix’s shares have seen a considerable rise this year, with a 38.5% increase, while Samsung’s stock has plummeted by 24.7%. SK Hynix’s shares were up 2.3% as of 0318 GMT.
Looking ahead, the chipmaker plans to raise capital spending to the mid-to-high 10 trillion won range in response to the higher-than-expected HBM demand. Furthermore, SK Hynix anticipates that the demand for memory chips for AI servers will continue to grow next year, as tech companies worldwide race to develop generative AI.
SK Hynix, Nvidia’s main HBM chip supplier, revealed last month that it had initiated mass production of its HBM3E 12-layer chips and aims to supply these latest products to unidentified customers by the end of this year.
($1 = 1,379.9600 won)
