A person walks past a SK Hynix logo within the lobby of the corporate’s Bundang office in Seongnam on January 29, 2021.
Jung Yeon-Je | AFP | Getty Images
SK Hynix, considered one of the world’s largest memory chip makers, said on Thursday that its second-quarter profit hit its highest level in six years, maintaining its leadership position in advanced memory chips critical to artificial intelligence.
Here are SK Hynix’s second-quarter results in comparison with LSEG SmartEstimate, which focuses on analyst forecasts that consistently produce more accurate results:
- Revenue: 16.42 trillion Korean won (about 11.86 billion US dollars) in comparison with 16.4 trillion Korean won
- Operating result: 5.47 trillion Korean won, in comparison with 5.4 trillion Korean won
Operating profit within the June quarter reached its highest for the reason that second quarter of 2018, recovering from a lack of 2.88 trillion won in the identical period last yr.
Sales rose 124.7 percent from April to June from 7.3 trillion won a yr earlier, the very best quarterly sales in the corporate’s history since 2009, in keeping with LSEG data.
SK Hynix said on Thursday that a continued increase in the general prices of its storage products – due to strong demand for AI storage, including high-bandwidth storage – led to a 32% quarter-on-quarter increase in revenue.
The South Korean giant supplies high-bandwidth memory chips for AI chipsets for firms like Nvidia.
SK Hynix shares fell as much as 7.81% on Thursday morning.
The declines occurred when South Korea’s Kospi The index lost as much as 1.91% after US technology stocks sold off overnight following disappointing alphabet And Tesla These reports give investors a primary glimpse into how megacap firms performed within the second quarter.
“In the second half of this year, strong demand for AI servers is expected to continue, and there will be a gradual recovery in conventional markets with the introduction of AI-enabled PCs and mobile devices,” the corporate said in its earnings call on Thursday.
SK Hynix is making the most of strong AI demand and plans to “extend its leadership position in the HBM market through mass production of 12-layer HBM3E products.”
The company will begin mass production of the 12-layer HBM3E this quarter after providing samples to major customers and expects to ship the products to customers within the fourth quarter.
Limited supply
Memory leaders like SK Hynix have aggressively expanded HBM capability to satisfy booming demand for AI processors.
HBM requires more wafer capability than traditional dynamic random access memory products – a form of computer memory used to store data – which SK Hynix says are also experiencing supply shortages.
“Capital investment needs are also increasing to meet demand for conventional DRAM as well as HBM, which requires more wafer capacity than regular DRAM. Therefore, the capital investment level this year is expected to be higher than what we expected at the beginning of the year,” SK Hynix said.
“While overcapacity is expected to increase next year due to increased industrial investment, a significant portion of it will be used to boost HBM production. The tight supply situation for conventional DRAM is therefore likely to persist.”
SK Kim of Daiwa Capital Markets said in a June 12 note that they expect “the tight supply of HBM and storage to continue until 2025 due to a bottleneck in HBM production.”
“Accordingly, we expect the favorable pricing environment to continue and SK Hynix to post solid earnings in 2024-25, benefiting from its competitiveness in HBM for AI graphics processors and high-density enterprise SSDs (eSSDs) for AI servers, which will lead to a re-rating of the stock,” Kim said.
The supply of high-bandwidth memory chips is depleted due to the explosion of artificial intelligence driven by large language models comparable to ChatGPT.
The AI boom is more likely to result in a decent supply of high-end memory chips this yr, analysts warn. SK Hynix and Micron announced in May that they’re out of stock of high-bandwidth memory chips for 2024, while inventory for 2025 can be almost sold out.
Large language models require many high-performance memory chips because these chips allow these models to recollect details from past conversations and user preferences to generate human-like responses.
SK Hynix has largely led the high-bandwidth memory chip market and was the only real supplier of HBM3 chips to Nvidia before rival Samsung has reportedly passed the tests for the usage of its HBM3 chips in Nvidia processors for the Chinese market.
The company expects to start shipping the subsequent generation of the 12-layer HBM4 within the second half of 2025.
