SK hynix assessed the recent rise in memory chip prices as "a fundamental change in market structure, not a simple, temporary supply-demand imbalance."
At a conference call on Apr. 23 for its first-quarter earnings, SK hynix, asked about the outlook for memory prices, said they "will show a trend clearly different from the past," adding, "With the rapid advance of artificial intelligence (AI) technology, the importance of memory is greater than ever, and IT companies are competitively increasing purchases to secure volume."
It continued, "By contrast, industry supply faces a constraint that makes a meaningful production ramp-up difficult in the short term due to investment slowdown after the last downturn and a lack of available space," and analyzed, "Suppliers are resuming new fab (factory) construction and infrastructure investment to build capacity for output expansion, but it will take considerable time to secure actual production capacity." It also added, "With this supply-demand imbalance persisting, customers are prioritizing securing volume over price," and "We expect a favorable pricing environment to continue for the time being."
This is interpreted to mean that the recent semiconductor boom, unlike cycles that relied on PC or smartphone replacement periods in the past, is based on a powerful, long-term driver of building AI server infrastructure. Given memory makers' conservative equipment investment stance and the physical lead time for plant expansion, it is seen as expressing confidence that a thoroughly supplier-driven market will unfold for the time being, centered on high-value core products such as high bandwidth memory (HBM) and enterprise solid-state drives (SSD) for corporations.
Meanwhile, SK hynix announced that on a consolidation basis it posted first-quarter revenue of 52.576 trillion won and operating profit of 37.61 trillion won. This is the first time SK hynix's quarterly revenue has surpassed 50 trillion won. Compared with a year earlier, revenue jumped 198% and operating profit surged 405%, marking the best results since the company's founding. In particular, thanks to improvements in a profitability-focused product mix, the quarterly operating margin hit 72%, renewing the record high. This is not only a 30-percentage-point jump from the same period last year (42%) but also an overwhelming level compared with global big tech rivals including Samsung Electronics.
Compared with the market consensus compiled over the past month by FnGuide (revenue 53.9208 trillion won, operating profit 38.2585 trillion won), revenue was about 2.5% lower and operating profit was about 1.7% lower.