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 first-quarter net profit of 1.92 trillion South Korean won ($1.39 billion). reverse a loss of two.58 trillion won in the identical period a yr ago.
This was the primary positive income because the third quarter of 2022, LSEG data showed. SK Hynix posted five consecutive quarters of net losses attributable to a slump within the memory chip market.
Revenue was 12.43 trillion won in the primary quarter, up 144% year-on-year. This was the best sales because the second quarter of 2022, in accordance with 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,” in addition to efforts to extend profitability.
SK Hynix is the second largest memory chip maker on the earth after Samsung Electronics and supplies high-bandwidth memory chips for AI chipsets for firms reminiscent of Nvidia.
The explosive demand for AI chipsets boosted the marketplace 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 recollect details from past conversations and user preferences to generate human-like responses.
To meet the demand for AI storage, the corporate plans to extend the provision of HBM3E – the newest generation of high-bandwidth storage for AI. SK Hynix said it’s going to also introduce 32GB Double Data Rate 5 products this yr to strengthen its leadership within 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 general memory market to grow steadily in the approaching months amid increasing demand for AI memory, while the traditional DRAM market begins to get well from the second half of 2024.
Pandemic-related demand for consumer electronics led to firms stockpiling memory chips. But macroeconomic uncertainties reminiscent of inflation caused consumers to limit their purchases of such consumer goods, resulting in a decline in demand and costs for memory chips.
To address excess inventory, firms like SK Hynix have cut production of their memory chips.
Shares of SK Hynix fell greater than 4% on Thursday morning, despite rising greater than 100% within the last yr.
Capturing AI demand
The company recently announced plans to satisfy AI demand.
The company announced this on Wednesday plans to construct a brand new factory in South Koreawith an estimated completion date of November 2025 to ramp up production of next-generation DRAM including HBM to satisfy growing demand for AI chips.
The total investment would amount to greater than 20 trillion won in the long run, SK Hynix said.
SK Hynix also works with TSMC, the world’s largest contract chipmaker, will construct high-bandwidth memory chips and next-generation packaging technology. Mass production of the HBM4 chips is scheduled to start in 2026.
According to an April 19 statement, SK Hynix will leverage TSMC’s state-of-the-art processes.
