(Bloomberg) — SK Hynix posted record quarterly profit and sales, reflecting strong demand for memory chips used in Nvidia Inc.’s processors for developing artificial intelligence.
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The South Korean semiconductor maker said its September quarter operating profit exceeded expectations at 7.03 trillion won ($5.1 billion) after sales nearly doubled. In addition, demand for DRAM and NAND flash memory chips is expected to grow by mid- to high-teens in 2025, suggesting that a sustained recovery in the broader market can be expected.
The company’s stock fell by about 1% in the Seoul market. The stock has risen more than 35% this year as the company widened its lead over Samsung Electronics Co. and Micron Technology Inc. in supplying cutting-edge, high-bandwidth memory to power Nvidia’s AI accelerators. According to Son Myung-seop, a senior analyst at iM Securities, investors generally expected good results and stock prices were strong.
Nvidia confirmed Thursday that it plans to begin supplying its top-of-the-line 12-layer HBM3E in the fourth quarter. This should increase HBM’s sales share of total memory revenue from 30% to 40%. Even away from AI, Hynix and its rivals are still grappling with the aftereffects of a long downturn in its computing and smartphone memory businesses.
“SK Hynix’s results show that it is focusing on premium products as the prices of some legacy chips decline,” said Greg Loh, an analyst at Hyundai Motor Securities. “This shows that the company has the technology and ability to focus where it can make a profit.” ”
Bloomberg intelligence statement
SK Hynix’s third-quarter operating margin may have improved from the second quarter due to improved average selling prices (ASP) for DRAM chips as Micron’s ASP rose 15% last quarter. Although demand for standard DRAM may have slowed due to the impact of smartphones and PCs, SK Hynix’s overwhelming market share in high bandwidth memory (HBM) chips may have contributed to its strong operating margin There is. The ASP of NAND chips may have increased slightly with Micron.
– Masahiro Wakasugi, Analyst
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Strong demand for enterprise solid-state drives used in large corporate data centers also boosted earnings.
SK Hynix said capital spending this year is likely to exceed previous plans to keep pace with the boom in spending on AI hardware. The company said Thursday that capital spending should increase in 2025.
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The Icheon-based company announced a number of investment plans this year, including $3.87 billion to build an advanced packaging factory and AI product research center in Indiana.
Domestically, it is spending $14.6 billion to build a new memory chip complex and is making other domestic investments, including the government-backed Yongin semiconductor cluster project.
–With assistance from Youkyung Lee.
(Updates from second paragraph with share action.)
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