Key Points:
Q3 operating profit reached a record 7.03 trillion won ($5.08 billion), beating forecasts.
Revenue rose 94% year-over-year, driven by high bandwidth memory (HBM) sales for AI servers.
The company expects continued growth in AI memory demand into 2025.
Sales of HBM surged over 70% from Q2 and tripled year-over-year.
SK Hynix projects memory market stabilization amid AI-optimized device development.
Record Profit Fueled by AI Demand
South Korean memory chip giant SK Hynix reported a record quarterly operating profit of 7.03 trillion won ($5.08 billion) for Q3, beating LSEG’s forecast of 6.8 trillion won. This marks a significant turnaround from the same period last year when the company posted a loss of 1.8 trillion won. Quarterly revenue reached 17.57 trillion won ($12.7 billion), a 94% increase year-over-year, as the company benefited from surging demand for AI-driven data center memory.
SK Hynix is a major supplier to Nvidia and has seen substantial growth in sales of premium HBM products, used in AI servers to improve processing capabilities and reduce power consumption. The company reported that HBM sales jumped by over 70% from the previous quarter and more than tripled compared to the same period last year.
High Bandwidth Memory: Driving AI Innovation
HBM, a type of DRAM with vertically stacked chips, is widely used in laptops, workstations, and data centers. SK Hynix, alongside Micron Technology and Samsung Electronics, leads the global HBM market. The company is optimistic about continued HBM demand as AI adoption expands, and it anticipates further growth in memory applications for AI-optimized devices, such as servers and enterprise SSDs.
"While memory demand for AI servers has grown noticeably this year, the company expects this trend to persist into next year," said SK Hynix in a press release.
A Shifting Memory Market
The global memory market faced a challenging 2023 due to oversupply, geopolitical tensions, and weak demand across consumer segments. However, the emergence of generative AI and the increased use of AI technology in various sectors have led to a rebound in the market.
SK Hynix forecasts that the memory demand from the PC and mobile markets, which have lagged in recovery, will grow steadily in 2025 as AI-integrated consumer devices become more common.
The company also recently began mass production of a new version of its HBM chips, with delivery expected by the end of the year.
Market Response
Despite the record profit announcement, SK Hynix shares saw an initial dip of 0.4% when trading began in South Korea but later recovered to rise by 1.3%.
Conclusion
SK Hynix's Q3 performance showcases the transformative impact of AI-driven demand on the memory chip market. As the company continues to innovate with HBM technology and anticipates market growth in AI-integrated products, it positions itself strongly for future success amid a recovering memory market.
