SK hynix posts record quarterly profit on AI chip boom
SK hynix, the world's top memory chip-maker by revenue, hit an all-time high quarterly operating profit of 9.2 trillion won ($6.73 billion) in the April-June period, thanks to soaring demand for its high bandwidth memory chips, a core component in AI processing.
Reporting the second quarter's earnings, the company said it aims to double HBM sales and shipments this year compared to 2024, as well as increase its capital expenditure beyond its initial plans for rising HBM demand starting in 2026.
The chipmaker reported that it has recorded 22.2 trillion won in sales in the second quarter, up 35.4 percent on-year. The operating profit also surged 68.5 percent over the same period, and net profit came in at 6.99 trillion won. Backed by strong earnings, SK hynix' cash holdings rose by 2.7 trillion won on-quarter to 17 trillion won. Its debt ratio stood at 25 percent, with net debt ratio at 6 percent, down 4.1 trillion won from the previous quarter.
"We are on track to meet our goal as a full stack AI memory provider, satisfying customers and leading market expansion through the timely launch of products with best-in-class quality and performance required by the AI ecosystem," Song Hyun-jong, president and head of Corporate Center at SK hynix, said.
"We will carry out part of the planned investments preemptively this year for a smooth delivery of major products with visible demand for next year, including HBM."
The strong performance was driven by the full-scale ramp up of 12-layer HBM3E sales and increased NAND flash shipments across all applications. The company also attributed its recent success to an aggressive investment by global big tech companies into AI.
"There are concerns about a potential demand slowdown in the second half (of the year), but major market fluctuations seem unlikely. We plan to focus operations on products with clear demand visibility," Kim Kyu-hyun, head of DRAM Marketing, said.
While HBM4 involves significant technical upgrades — including expanded (input/output) for higher bandwidth, design changes for lower power consumption and the application of logic processes to the base die — SK hynix said it is factoring in the increased production costs as much as possible into its pricing strategy.
"We aim to establish optimal pricing in collaboration with customers, while maintaining a healthy level of profitability," said Kim Ki-tae, SK hynix vice president and head of HBM sales and marketing.
Regarding the latest US export controls possibly weakening the role of its Chinese manufacturing facilities, SK hynix emphasized that its China fabs will remain a core part of its global memory production strategy.
"Shortage in legacy products, such as DDR4 and LPDDR4, are emerging across the industry, and we see our China fab playing a key role in meeting that demand," Song said. He also forecast that long-term demand for the legacy products would remain steady, particularly from Chinese smartphone makers.
Capacity for older-generation DRAM chips has tightened in the past months as global production shifts toward HBM chips and newer DRAM standards like DDR5 and LPDDR5.
Over Nvidia's plan to supply the H20 chips to China, SK hynix said it is ready to respond quickly if customer demand and supply conditions align. The company currently supplies 8-layer HBM3 — the previous-generation product — for the H20.
SK hynix also plans to launch its 24Gb GDDR7 in the second half of the year, which is reportedly intended for Nvidia's upcoming RTX Pro AI accelerator targeting the Chinese market.
Additionally, the company is focusing on strengthening its core DRAM technology, which underpins HBM. The company said it is developing next-generation technologies such as 3D DRAM and vertical gate architectures, and plans to begin transitioning to its sixth-generation 10-nanometer-class process in the second half of this year, with full-scale adoption scheduled for next year.
In the NAND business, the company said it will take a cautious investment approach, prioritizing profitability and market demand, while continuing product development in anticipation of future market recovery.
The company plans to expand sales of QLC-based high-capacity eSSDs and strengthen its product portfolio built on 321-layer NAND.
Regarding its M15X fab in Cheongju, SK hynix said it plans to begin operations in the fourth quarter of this year, with mass production of next-generation HBM scheduled to start next year.
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