SK hynix is leading the artificial intelligence (AI) semiconductor key component market of high bandwidth memory (HBM) and achieved its highest quarterly performance ever in the second quarter (April to June) of this year. As the AI market rapidly grows, the demand for AI memory semiconductors continues to rise, with HBM technology maintaining a market advantage and sustaining high performance.
SK hynix reported a provisional operating profit of 9.2129 trillion won for the second quarter on a consolidated basis, marking a 68.4% increase compared to the same period last year, as disclosed on the 24th. The operating profit margin stood at 41%. The second-quarter revenue reached 22.232 trillion won, up 35.4% from the same period last year. This performance surpassed the recently raised market expectations (revenue of 20.7186 trillion won and operating profit of 9.648 trillion won). The net profit reached 6.9962 trillion won, a 69.8% increase from the previous year (net profit margin of 31%).
Both revenue and operating profit recorded the highest figures in the history of SK hynix, surpassing the previous all-time high set in the fourth quarter of last year (revenue of 19.770 trillion won and operating profit of 8.08 trillion won) within just two quarters. This quarter's operating profit also exceeded Samsung Electronics' (DS) division, while also surpassing Samsung Electronics' overall operating profit, which includes home appliances and mobile, by twofold. Samsung Electronics' provisional operating profit for the second quarter is estimated at 4.6 trillion won, which is half of SK hynix's, with the operating profit from the semiconductor division estimated to be around 600 billion won. This marks the second time SK hynix has outperformed Samsung Electronics' overall results following the fourth quarter of last year.
SK hynix noted, "As global big tech corporations actively invest in AI, the demand for memory for AI has steadily increased," adding, "Both DRAM and NAND flash recorded shipment volumes exceeding expectations, achieving the highest performance ever." It continued, "DRAM has significantly expanded sales of HBM3E (5th generation) 12 layers, and NAND has seen increased sales across all applications."
SK hynix's market share in the HBM sector is reported to have exceeded 60% in the second quarter. Last year in the fourth quarter, SK hynix secured a competitive edge by being the first in the industry to supply HBM3E 12 layers to NVIDIA, which controls 80% of the AI chip market. Generally, HBM is 3 to 5 times more expensive than general-purpose DRAM, directly impacting profitability.
Based on these results, SK hynix's cash assets at the end of the second quarter rose by 2.7 trillion won from the previous quarter, totaling 17 trillion won. The borrowing fund ratio was 25%, and the net borrowing fund ratio was 6%, with net borrowings decreasing by approximately 4.1 trillion won compared to the end of the first quarter.
SK hynix forecasts that memory demand growth will continue as customers increased their memory purchases during the second quarter, sustaining stable inventory levels, while product launches by customers in the second half are also anticipated. It projected that the competition among big tech companies for AI model inference would increase demand for high-performance, high-capacity memory. Additionally, the investment in 'sovereign AI' by various countries is expected to become a new growth driver for increasing demand for memory in the long term. Sovereign AI refers to a nation building an independent AI system using its own infrastructure, data, personnel, and business networks.
In light of these results, SK hynix aims to double its HBM revenue and shipments this year compared to last year. It stated that it is preparing to supply HBM4 (6th generation) in line with customer requirements. In addition, SK hynix plans to start supplying LPDDR-based modules for servers within this year, and intends to introduce a 24Gb (gigabit) product for AI GPUs, which is currently supplied at 16Gb (gigabit).
NAND plans to continue its cautious investment stance along with a focus on profitability while promoting product development in preparation for improved market conditions in the future. In particular, it plans to strengthen its market competitiveness by expanding sales of QLC (quad-level cell) based high-capacity enterprise SSDs and establishing a product portfolio based on 321 layers of NAND.
Song Hyun-jong, CEO of SK hynix, said, "To ensure a smooth supply of key products such as HBM, for which demand visibility is secured next year, we will execute some preemptive investments this year," adding, "We aim to become a 'full stack AI memory provider' that leads customer satisfaction and market growth by timely launching products that meet the highest quality and performance required by the AI ecosystem."