SK hynix posts record profit on AI chip boom, sees continued growth

Seoul, South Korea - SK hynix (000660. KS), the world's second-largest memory chipmaker, reported a quarterly profit on Thursday as artificial intelligence-driven demand for premium chips boosted sales and margins.

Operating profit for the July-September quarter reached KRW 7.03 trillion (US$5.09 billion), compared with a loss of KRW 1.79 trillion (US$1.30 billion) a year earlier. 

The company said in a regulatory filing that revenue surged 94% to KRW 17.57 trillion (US$12.73 billion).

The results mark SK hynix's highest quarterly profit since its founding, surpassing the previous KRW 6.47 trillion (US$4.69 billion) set during the 2018 semiconductor boom.

Sales of High Bandwidth Memory (HBM) chips, crucial for AI applications, jumped more than 70% from the previous quarter and 330% from a year earlier. 

HBM chips accounted for 30% of DRAM revenue in the third quarter, and this percentage is expected to reach 40% in the fourth quarter.

"SK hynix has solidified its position as the world's No.1 AI memory company by achieving the highest business performance ever in the third quarter of this year," Chief Financial Officer Kim Woohyun said in a statement.

The company's enterprise SSD sales grew approximately 20% quarter-on-quarter and 430% year-on-year, reflecting strong data center demand.

DRAM and NAND flash memory chips saw average selling prices rise by mid-teens percentages compared to the previous quarter, driving profitability improvements. 

The operating margin reached 40%, up from 33% during the last quarter.

EXPANSION PLANS

SK hynix announced plans to increase infrastructure capital expenditure in 2025 to construct its M15X facility and first fab in Yong-in. 

The M15X fab is expected to contribute to DRAM production starting in 2026.

The company began mass production of 12-layer HBM3E products last month and plans to start shipments in the fourth quarter. 

In late August, it developed the industry's first 1-nanometer 16Gb DDR5 memory chip.

MARKET OUTLOOK

The chipmaker forecasts DRAM market demand to grow by the high teens in 2025, while NAND demand is expected to increase by the mid-teens.

For the fourth quarter, SK hynix expects DRAM shipments to increase by a mid-single-digit percentage and NAND shipments to grow by a low-teens percentage quarter-on-quarter.

The company maintained a strong balance sheet with cash and cash equivalents of KRW 10.86 trillion (US$7.87 billion) at quarter-end while reducing its debt-to-equity ratio to 33% from 57% a year earlier.

Net profit for the quarter reached KRW 5.75 trillion (US$4.17 billion), compared with a net loss of KRW 2.18 trillion (US$1.58 billion) a year earlier. 

The company's EBITDA margin improved to 57% from 17%.

(US$1 = KRW1,380.82)