Nvidia supplier SK Hynix's profit more than doubles, beating estimates as tariffs loom
SK Hynix said it is bracing for increased uncertainty and volatility spurred by US tariff policies. PHOTO: BLOOMBERG
SEOUL - SK Hynix's first-quarter profit more than doubled, driven by strong sales of advanced chips used in generative artificial intelligence (AI) chipsets and as some customers stockpiled semiconductors ahead of potential US tariffs.
The Nvidia supplier reported a 7.4 trillion won (S$6.8 billion) operating profit for the January-March period versus 2.9 trillion won a year earlier. That compared with a 6.6 trillion won average forecast by LSEG SmartEstimate, which is weighted toward analysts who are more consistently accurate.
Quarterly revenue for the South Korean firm rose 42 per cent to 17.6 trillion won.
SK Hynix has been leading a global race to meet explosive demand for high bandwidth memory (HBM) chips, a crucial component of AI chipsets made by the likes of Nvidia which help process vast amounts of data to train AI models.
The firm has been a main HBM chip supplier to Nvidia, as its cross town rival Samsung Electronics has struggled to keep up in the race.
SK Hynix maintained its forecast of HBM demand doubling this year from 2024.
Still, it said it's bracing for increased uncertainty and volatility spurred by US tariff policies.
SK Hynix's stock price is up just around 4 per cent since the start of the year. Fears of a tariff-fueled global recession as well as a reevaluation of AI profitability in the face of DeepSeek's low-cost models are denting momentum that had helped its shares more than double over the past two years.
The stock performance reflects the chipmaker's vulnerability to any slowdown in AI spending and the Trump administration's attempts to reset global trade relations. Should trade tensions tip economies around the world into recession, end-demand for all products containing chips is at risk of plummeting.
'Earnings season won't matter with larger forces at work,' Morgan Stanley analysts led by Shawn Kim said in a note to investors this week. 'The real tariff impact on memory resembles an iceberg, with most danger unseen below the surface and still approaching.' REUTERS, BLOOMBERG
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