In the first quarter of this year, SK hynix, which achieved the largest-ever performance in the fourth quarter of last year, is projected to post an operating profit of over 6 trillion won, a decrease of more than 1 trillion won from the previous quarter, as its shipment of high bandwidth memory (HBM) to NVIDIA is expected to slightly decline.
Analysts suggest that SK hynix is also facing unavoidable setbacks as the production capacity of TSMC, which manufactures chips for its largest client, NVIDIA, has reached its limit, and the U.S. semiconductor export regulations are impacting NVIDIA's artificial intelligence (AI) chip exports.
On the 12th, a consensus of SK hynix's first-quarter performance forecast in the securities industry indicates that operating profit is expected to be around 6 trillion won. It is also strongly anticipated that revenue will drop to about 17 trillion won, a decrease of over 12%. However, there is potential for performance improvement in the second quarter of this year as sales of NVIDIA's "Blackwell" expand.
SK hynix set a quarterly record last year with revenue of 19.767 trillion won and an operating profit of 8.0828 trillion won (operating profit margin of 41%). However, concerns have been raised about the increasing reliance on HBM, as 40% of its DRAM revenue comes from HBM.
The reason for the poor performance in the first quarter of this year is also due to the stagnation of HBM product shipments to its largest client, NVIDIA. Recently, the Taiwan Economic Journal reported that TSMC's 3-5 nanometer process utilization has reached its maximum capacity. In a situation where the production of NVIDIA's AI chip "Blackwell" is delayed due to unresolved heating issues, the saturation of TSMC's production capacity is negatively affecting NVIDIA.
Moreover, custom semiconductors (ASICs), led by Broadcom, are emerging as a cost-effective alternative to graphics processing units (GPUs), causing big tech companies that previously relied on NVIDIA to increasingly increase their ASIC orders, which is affecting NVIDIA's position in the AI chip market. Companies like Microsoft (MS), Google, and Amazon are working on developing ASICs to replace GPUs.
Market research firm Market Research Future projected that the global ASIC market would grow rapidly from $23.13 billion (approximately 33.35 trillion won) this year to $47.88 billion (about 69.4 trillion won) by 2034. JP Morgan forecasted that the ASIC market would grow at an annual rate of over 20% and that Broadcom's market share would be dominant at 55-60%.
Additionally, the uncertainty surrounding NVIDIA's AI chip exports due to semiconductor regulations under the Trump administration is likely to pose a risk to SK hynix's overall performance this year. Morgan Stanley noted that "on Jan. 21 of this year, Trump's 'AI dissemination rules' limited semiconductor exports not only to China but also to Tier 2 countries, and the process of obtaining (export) licenses is time-consuming and results are uncertain, which is expected to have a negative impact."
Domestic securities firms have predicted that due to sluggish demand for memory semiconductors, SK hynix's DRAM and NAND flash shipments in the first quarter of this year would each decline by approximately 12% and 18%, respectively. Notably, there are analyses anticipating a shift to losses in the NAND flash sector. No Geun-chang, a researcher at Hyundai Motor Securities, stated that "starting in the second half of this year, the volume of HBM3E (5th generation HBM) supplies will increase significantly, further raising the proportion of HBM," while also mentioning that "due to the imposition of semiconductor tariffs by the United States and TSMC's confirmation of new investments in wafer and packaging plants in the U.S., SK hynix's approach to relieving the tariff burden on HBM will be a point of observation going forward."