SK Hynix Inc. signage at its headquarters in Seongnam, South Korea, on Monday, April 22, 2024. SK Hynix is scheduled to release earnings results on April 25. Photographer: SeongJoon Cho/Bloomberg via Getty Images
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South Korean memory chip maker SK Hynix on Thursday reported a net profit of 1.92 trillion South Korean won ($1.39 billion) in the first quarter, reversing a loss of 2.58 trillion won in the same period last year.
This was the first positive income since the third quarter of 2022, LSEG data showed. SK Hynix posted five consecutive quarters of net losses due to a slump in the memory chip market.
Revenue was 12.43 trillion won in the first quarter, up 144% year-on-year. This was the highest sales since the second quarter of 2022, according to LSEG data.
SK Hynix attributed the strong performance to an “increase in sales of AI server products, supported by its leadership in AI storage technology, including high-bandwidth storage,” as well as efforts to increase profitability.
SK Hynix is the second largest memory chip maker in the world after Samsung Electronics and supplies high-bandwidth memory chips for AI chipsets for companies such as Nvidia.
The explosive demand for AI chipsets boosted the market for high-end memory chips, benefiting players like SK Hynix and Samsung Electronics hugely.
Large language models like ChatGPT – which led to a surge in AI adoption – require many powerful memory chips because these allow these models to remember details from past conversations and user preferences to generate human-like responses.
To meet the demand for AI storage, the company plans to increase the supply of HBM3E – the latest generation of high-bandwidth storage for AI. SK Hynix said it will also introduce 32GB Double Data Rate 5 products this year to strengthen its leadership in the high-capacity server DRAM market.
“We will continue to work to improve our financial results by delivering the industry’s best-performing products at the right time and maintaining a commitment to profitability,” said Chief Financial Officer Kim Woohyun.
The company expects the overall memory market to grow steadily in the coming months amid increasing demand for AI memory, while the conventional DRAM market begins to recover from the second half of 2024.
Pandemic-related demand for consumer electronics led to companies stockpiling memory chips. But macroeconomic uncertainties such as inflation caused consumers to limit their purchases of such consumer goods, leading to a decline in demand and prices for memory chips.
To address excess inventory, companies like SK Hynix have cut production of their memory chips.
Shares of SK Hynix fell more than 4% on Thursday morning, despite rising more than 100% in the last year.
Capturing AI demand
The company recently announced plans to meet AI demand.
The company said on Wednesday that it plans to build a new factory in South Korea, with an expected completion date of November 2025, to increase production of next-generation DRAM including HBM and meet growing demand for AI chips.
The total investment would amount to more than 20 trillion won in the long term, SK Hynix said.
SK Hynix is also working with TSMC, the world’s largest contract chipmaker, to build high-bandwidth Memory 4 chips and next-generation packaging technology. Mass production of the HBM4 chips is scheduled to begin in 2026.
According to an April 19 statement, SK Hynix will leverage TSMC’s state-of-the-art processes.
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2024-04-25 02:40:59
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