SK Hynix, a South Korean memory chipmaker, reported a net profit of 1.92 trillion South Korean won in the first quarter, marking a significant turnaround from the losses it experienced in the same period the previous year. This positive income, the first since the third quarter of 2022, was driven by a 144% increase in revenue, reaching 12.43 trillion won, the highest in two years. The strong performance was attributed to an increase in sales of AI server products, fueled by the company’s leadership in AI memory technology and efforts to drive profitability. SK Hynix is the world’s second-largest memory chipmaker and supplies high bandwidth memory chips for AI chipsets.
The demand for AI chipsets, particularly for large language models like ChatGPT, has surged, leading to a boost in the high-end memory chip market. This increased demand for high-performance memory chips has greatly benefited companies like SK Hynix and Samsung Electronics. To meet the demand for AI memory, SK Hynix plans to increase the supply of HBM3E, the latest generation of high-bandwidth memory for AI applications. Additionally, the company will introduce 32GB Double Data Rate 5 products this year to strengthen its position in the high-capacity server DRAM market. The firm aims to continue providing industry-leading products and maintaining a commitment to prioritizing profitability.
Despite the positive performance, macroeconomic uncertainties such as inflation have caused consumers to cut back on purchases of consumer electronics, impacting the demand and prices for memory chips. To address excess inventories, companies like SK Hynix have reduced production of memory chips. In response to the changing market conditions, the company plans to focus on the growing demand for AI memory while anticipating a recovery in the conventional DRAM market in the second half of 2024. SK Hynix shares saw a decline of more than 4% on Thursday morning, although they have risen over 100% in the past year.
To capture the increasing demand for AI chips, SK Hynix announced plans to build a new fab in South Korea, scheduled for completion by November 2025. With a total investment expected to exceed 20 trillion won in the long term, the company aims to increase production of next-generation DRAM, including HBM, to meet the proliferating demand for AI chips. Moreover, SK Hynix is partnering with TSMC, the world’s largest contract chip manufacturer, to develop high-bandwidth memory 4 chips and next-generation packaging technology, with mass production of HBM4 chips anticipated to begin in 2026. Leveraging TSMC’s cutting-edge processes, the company aims to further solidify its position in the memory chip market and capitalize on the growing AI demand.
