Nvidia supplier SK Hynix sees limited tariff impact on AI chips after bumper Q1
SEOUL: SK Hynix, a key supplier of high-bandwidth memory processors to Nvidia, said quarterly profit more than doubled and demand for AI chips was so robust that it expects only limited impact on those products from potential US tariffs.
Washington has launched an investigation into semiconductor imports, arguing that extensive reliance on foreign production is a national security threat.
There have also been concerns that increased US export controls on chips to China, which have resulted in a US$5.5 billion hit to Nvidia, could harm SK Hynix.
"Regarding our HBM business, what we can clearly state is that there has been no change to our sales plans for this year to key customers, which remain in line with the levels set in previously signed contracts," Kim Ki-tae, the company's head of HBM sales & marketing told an earnings briefing.
Ryu Young-ho, a senior analyst at NH Investment & Securities, said while it was a relief that there were no issues with HBM chip shipments to Nvidia, there are still worries that advance purchases and stockpiling across the industry seen in recent months may lead to weaker demand in the second half.
SK Hynix logged its second-highest quarterly operating profit ever in the first quarter with a 158 per cent jump to 7.4 trillion won (US$5.2 billion), boosted by strong AI-related demand and stockpiling of smartphone and PC chips ahead of potential increases in US tariffs.
That handily beat a 6.6 trillion won LSEG SmartEstimate, which is weighted toward more consistently accurate analysts.
Revenue soared 42 per cent to 17.6 trillion won
The company said it expects spending by big tech firms on server chips to continue as they seek to capture early opportunities in the artificial intelligence market.
In smartphones, the advancement of AI features in new models is expected to drive replacement demand, boosting sales of high-performance mobile DRAM chips, it added.
SK Hynix has been leading a global race to meet explosive demand for HBM chips, a crucial component of chipsets made by the likes of Nvidia that help process vast amounts of data to train AI models.
It is the main HBM chip supplier to Nvidia as cross-town rival Samsung Electronics has struggled to keep up.
SK Hynix shares were down 1.5 per cent, underperforming the benchmark KOSPI's 0.5 per cent fall.
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