By Heekyong Yang, Hyunjoo Jin and Joyce Lee
SEOUL (Reuters) – South Korea’s SK Hynix posted a record quarterly profit on Thursday as the Nvidia supplier posted strong sales of its advanced chips and said demand for high-bandwidth memory (HBM) chips would continue to outpace supply next year surpass.
The company downplayed market concerns about an oversupply of chips used in generative AI chipsets, saying production of higher-margin HBM chips was limited due to technological challenges, while demand proved stronger than expected.
“We believe that it is premature to talk about a slowdown in demand for AI chips and HBM at this time,” Kim Kyu Hyun, head of DRAM marketing at SK Hynix, said on a conference call, citing the ever-increasing demands on computing power.
The world’s second-largest memory chipmaker posted an operating profit of 7 trillion won ($5.07 billion) in the July-September quarter, after a loss a year earlier. That compared with an average forecast of 6.8 trillion won by LSEG SmartEstimate, which is weighted by analysts who are more consistently accurate.
SK Hynix has outperformed rivals Samsung Electronics and Micron Technology in recent quarters as it has benefited most from the AI-driven appetite for high-end memory chips following its early entry and major investments in HBM chip development.
Its bigger rival Samsung warned earlier this month that third-quarter profit would be below market expectations and apologized for the disappointing performance, citing delays in sales of its high-end HBM3E chips to an unidentified major customer.
Nvidia CEO Jensen Huang said on Wednesday that a design flaw in the latest Blackwell AI chips, which affected production, has been fixed with the help of Taiwanese manufacturing partner TSMC. Those AI chipsets use HBMs from SK Hynix, analysts say.
SK Hynix said HBM sales showed strong growth, up more than 70% from the previous quarter. Total revenue for the quarter rose 94% year-on-year to 17.6 trillion won.
“SK Hynix has reaffirmed its competitive advantage in the HBM market. Its leading position as a supplier of HBM chips is likely to continue next year,” said Ko Yeongmin, analyst at Daol Investment & Securities.
Shares of SK Hynix rose 2.3% against a 0.1% decline in benchmark KOSPI as of 0318 GMT.
Shares are up 38.5% so far this year, while Samsung shares are down 24.7%. Samsung shares fell 2% on Thursday.
SK Hynix expects HBM sales to account for 40% of total DRAM sales in the fourth quarter, up from 30% in the third quarter. SK Hynix also expects demand for memory chips for AI servers to grow further next year as global technology companies rush to develop generative AI.
The chipmaker plans to increase capital expenditures to the mid-to-high range of 10 trillion won to help respond to higher-than-expected HBM demand, with a slight increase expected in 2025, CFO Kim Woo Hyun said.
Last month, SK Hynix, the main supplier of HBM chips to Nvidia, said it had started mass production of HBM3E 12-layer chips and plans to deliver the latest products to unidentified customers by the end of this year.
($1 = 1,379,9600 won)
(Reporting by Heekyong Yang, Hyunjoo Jin. Joyce Lee; Editing by Muralikumar Anantharaman and Sonali Paul)
