SK Hynix Inc. sign at the company’s offices in Seongnam, South Korea, on Monday, April 22, 2024. SK Hynix is scheduled to release earnings on April 25. Photographer: Sungjoon Cho/Bloomberg via Getty Images
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South Korean memory chip maker SK Hynix on Thursday reported net profit of 1.92 trillion won ($1.39 billion) in the first quarter. recovery of loss the same period a year ago recorded 2.58 trillion won.
This is the first positive earnings recorded since the third quarter of 2022, according to LSEG. SK Hynix posted net losses for five straight quarters due to a downturn in the memory chip market.
Revenue in the first quarter was 12.43 trillion won, up 144% from a year ago. This was the highest revenue since the second quarter of 2022, according to LSEG.
SK Hynix attributed the strong results to “increased sales of AI server products, supported by its leadership in AI memory technologies, including high-bandwidth memory,” as well as efforts to improve profitability.
SK Hynix is the world’s second largest memory chip maker after Samsung Electronics and supplies high-bandwidth memory chips designed for artificial intelligence chipsets to companies such as Nvidia.
Explosive demand for AI chipsets has driven the growth of the high-end memory chip market, greatly benefiting players such as SK Hynix and Samsung Electronics.
Large language models such as ChatGPT, which have led to a surge in AI adoption, require large numbers of high-performance memory chips, as such chips allow these models to remember details of past conversations and user preferences in order to generate human-like responses.
To meet demand for AI memory, the company said it plans to increase supplies of HBM3E, the latest generation of high-bandwidth memory 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 performance by delivering the industry’s most effective products at the right time and keeping profitability first,” said Chief Financial Officer Kim Woohyun.
The firm forecasts that the overall memory market will grow steadily in the coming months on the back of rising demand for artificial intelligence memory, while the conventional DRAM market will begin to recover from the second half of 2024.
Demand for consumer electronics driven by the pandemic has forced companies to stockpile memory chips. But macroeconomic uncertainties such as inflation have caused consumers to reduce purchases of such consumer goods, leading to lower demand and prices for memory chips.
To address the problem of excess inventory, companies such as SK Hynix have reduced production of their memory chips.
Shares of SK Hynix fell more than 4% on Thursday morning, although they have jumped more than 100% over the past year.
Meeting the demand for AI
The company recently made announcements aimed at meeting the demand for AI.
The company announced this on Wednesday. plans to build a new plant in South Koreawith an estimated completion date of November 2025 to ramp up production of next-generation DRAM, including HBM, to meet growing demand for artificial intelligence chips.
According to SK Hynix, in the long term the total investment will be more than 20 trillion won.
SK Hynix also cooperates with TSMC., the world’s largest contract chip manufacturer, to create high-bandwidth 4 memory chips and next-generation packaging technology. Mass production of HBM4 chips is expected to begin in 2026.
According to a statement on April 19, SK Hynix will use TSMC’s advanced technologies.