SK Hynix Inc reported a five-fold jump in quarterly profit, underscoring the surging prices of the memory chips that underpin the boom in global artificial intelligence (AI) development.
Operating profit last quarter jumped to 37.61 trillion won (US$25.4 billion), a record high that compares with analysts’ average estimate of 35.7 trillion won. Sales nearly tripled to 52.58 trillion won.
Favorable memory prices would continue on robust demand and SK Hynix’s capital spending would increase significantly this year, it said.
Photo: SeongJoon Cho, Bloomberg
The chipmaker is riding an AI spending boom that is reshaping the memory sector and offsetting fears around supply chain disruptions stemming from the war in the Middle East. The outperformance might fuel the stance of bullish investors, who argue that the advent of AI is igniting a super-cycle of demand that would help SK Hynix and its rivals break a decades-old cycle of boom and bust.
Hyperscalers from Meta Platforms Inc to Amazon.com Inc are spending hundreds of billions of US dollars on AI hardware. That is fueling earnings at SK Hynix, which is benefiting from its lead in high-bandwidth memory (HBM), critical for training and running AI models alongside Nvidia Corp accelerators.
SK Hynix and its competitors — Samsung Electronics Co and Micron Technology Inc — are also allocating more production capacity to lucrative HBM, spurring shortages and price spikes in conventional memory. That is further boosting revenue for memory makers.
Photo: AFP
In response to the demand, SK Hynix said in January that its capital expenditure for this year would rise significantly from 30.2 trillion won last year. Last month, it announced a plan to spend the equivalent of US$8 billion on cutting-edge extreme ultraviolet lithography chipmaking tools from ASML Holding NV.
Larger rival Samsung plans to spend more than 110 trillion won on chip capacity expansion and research this year, devoting a record amount of capital toward an effort to seize the lead in AI semiconductors.
Shares of SK Hynix have climbed about 90 percent this year after more than tripling last year, outrunning Samsung.
However, Samsung appears to be ahead in the next-generation HBM4 arena. It was first to commercially ship HBM4 chips and it showcased its cutting-edge HBM4E at Nvidia’s GTC event.
The benchmark contract price for 8 gigabits of DDR4 PC memory has risen for 11 consecutive months, hitting about US$13 last month, market tracker DRAMeXchange said. The steady uptrend has boosted margins across SK Hynix’s core business. Higher NAND flash prices also contributed.
The average selling price of DRAM climbed 60.8 percent in the first quarter from the previous quarter, while that of NAND rose 55.3 percent, according to estimates by Mirae Asset Securities Co. Demand for enterprise solid-state drives has also surged alongside data center investment.
While pledging to expand capacity, SK Chairman Chey Tae-won cautioned in February that losses remain a possibility in the future in an era of rapid technological shifts.
He also highlighted mounting infrastructure challenges.
He said SK Group is exploring building power plants alongside AI data centers, as failure to meet energy demand could be “disastrous.”
Some investors also point to the rise of Chinese memory chipmakers as a potential threat to the dominant players.
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