SK Hynix hits record profit amid AI chip demand surge

SK Hynix hits record profit amid AI chip demand surge is profiled by BTW Media because public-source evidence links it to internet infrastructure, governance, operational dependencies, or market visibility.

• SK Hynix reported its highest quarterly profit since 2018 due to high demand for AI-essential HBM chips, but its shares fell 8.4% in morning trade.
• Analysts predict significant growth for SK Hynix due to increased demand for HBMs, but the company’s stock price fell due to broader market sentiment despite strong earnings.

OUR TAKE
SK Hynix, a leader in HBM technology, plans to launch advanced HBM chips, with significant future growth potential in the AI sector. The stock market’s reaction highlights the challenge of balancing short-term investor expectations with long-term technological advances. Investors should recalibrate their expectations, embracing a broader vision. After all, in tech, it’s not just about today’s profits but tomorrow’s breakthroughs.
–Ashley Wang, BTW reporter

What happened

SK Hynix reported its highest quarterly profit since 2018, driven by surging demand for high-bandwidth memory (HBM) chips, essential for AI applications. The world’s second-largest memory chip maker posted an operating profit of $3.96 billion for April-June, reversing the loss from the previous year. Revenue also soared by 125%.

However, despite this impressive performance, SK Hynix shares fell as much as 8.4% in morning trade, mirroring declines in US tech stocks, including Nvidia, a key partner and major player in the AI chip market.

SK Hynix, a leader in HBM technology, began mass production of its fifth-generation HBM chips, HBM3E, in March, with initial shipments directed to Nvidia. The company plans to introduce even more advanced versions, including the 12-layer HBM3E later this year and the HBM4 in the second half of 2025. Meanwhile, Samsung, another competitor, is yet to meet Nvidia’s standards for the latest HBM chips.

Also read: SK On declares ‘emergency’ amid disappointing EV sales

Also read: Nvidia tailors AI chips for China market under U.S. export controls

Why it’s important

This financial leap underscores the growing appetite for AI technology, particularly in high-end chips like HBM, which are critical for data centre servers and on-device AI services. According to Kim Kyu Hyun, Head of DRAM Marketing at SK Hynix, “AI demand continues to grow above expectations,” indicating that next year’s HBM shipments are expected to more than double.

SK Hynix is poised for significant growth. Analysts predict that HBMs could account for 20% of the company’s DRAM chip profits by the end of 2024, up from nearly zero in early 2023, fuelled by Nvidia’s accelerating AI graphics processor production plans.

However, its decline in shares, despite the strong earnings, reflects broader market sentiment where high investor expectations aren’t being met, causing volatility. It is the stock market that highly focuses on immediate returns and investors who position their expectations ridiculously high.