SK hynix achieved record-high sales and operating profit last year, driven by its dominance in the high-bandwidth memory (HBM) market, which has seen a significant increase in demand due to the emergence of the artificial intelligence (AI) market, and a rise in sales of DRAM for high-performance servers.
SK hynix noted on the 23rd that it recorded an operating profit of 8 trillion won and sales of 19.767 trillion won in the fourth quarter of last year. Compared to the same period last year, sales surged by 74.8% and operating profit by 2235.8%. This aligns with the market expectations initially projected by the securities industry (operating profit of 8 trillion won).
On an annual basis, the company recorded 66.193 trillion won in sales and an operating profit of 23.4673 trillion won (operating profit margin of 35%), with a net profit of 19.7969 trillion won (net profit margin of 30%), marking its best performance since its establishment. In the semiconductor sector alone, it is expected to surpass Samsung Electronics in annual operating profit.
The main driving force behind the record performance is its overwhelming position in the high-bandwidth memory (HBM) market. SK hynix explained that, amid strong demand for AI memory semiconductors, it achieved the best results in its history through industry-leading HBM technology and management focused on profitability.
In the fourth quarter of last year, HBM continued to show high growth rates, accounting for over 40% of total DRAM sales, while the sales of enterprise SSDs (eSSD) also expanded. SK hynix emphasized that it established a stable financial situation through profitability-centered management based on differentiated product competitiveness, which led to ongoing performance improvement.
The company described the transition to a memory market focused on high performance and high quality due to the growing demand for AI memory, emphasizing that this performance confirmed the significance of having the capability to timely supply products that meet customer requirements, enabling stable profit generation.
Based on this performance, SK hynix's cash assets are expected to reach 14.2 trillion won by the end of 2024, an increase of 5.2 trillion won compared to the end of the previous year, while borrowings have decreased by 6.8 trillion won to 22.7 trillion won during the same period. Consequently, the ratios of borrowings and net borrowings were significantly improved to 31% and 12%, respectively.
SK hynix projected that as big tech companies expand their investments in AI servers and the importance of AI inference technologies grows, the demand for HBM and high-capacity server DRAM will continue to expand. In the consumer product market, which is expected to undergo some inventory adjustments, sales of PCs and smartphones equipped with AI capabilities are also anticipated to grow, leading to an improvement in market conditions moving into the second half of the year.
In response to this, the company plans to increase the supply of HBM3E this year and develop HBM4 in a timely manner to meet customer requests. Furthermore, as steady demand continues, it aims to push forward with the transition to advanced processes necessary for the production of competitive DDR5 and LPDDR5. NAND will likewise respond to the market with profitability-centered operations and flexible sales strategies adjusted to demand conditions.
Meanwhile, SK hynix increased its annual fixed dividend from 1,200 won to 1,500 won, raising its total cash dividends to an annual scale of 1 trillion won. The company plans to prioritize the use of the 5% of annual free cash flow (FCF) previously included in the dividend policy to strengthen financial soundness, only paying the fixed dividends in the future.
Kim Woo-hyun, Chief Financial Officer of SK hynix, stated, "By significantly increasing the share of high-value product sales, we have established a business structure capable of achieving stable sales and profits compared to the past even during periods of market adjustment," adding, "We will continue to make investment decisions flexibly according to market conditions while adhering to the principle of focusing on profitability-secured products."