A sign of SK Hynix in Seongnam, South Korea, Monday, April 22, 2024. SK Hynix is scheduled to release earnings data on April 25. Photographer: SeongJoon Cho/Getty Images via Bloomberg
Bloomberg |
South Korean memory chip maker SK Hynix on Thursday reported first-quarter net profit of 1.92 trillion won ($1.39 billion). This contrasted with a record loss of 2.58 trillion won in the same period last year.
It recorded positive revenue for the first time since the third quarter of 2022, London Stock Exchange data showed. SK Hynix has posted net losses for five consecutive quarters due to a slump in the memory chip market.
Revenue in the first quarter was 12.43 trillion won, an increase of 144% year-on-year. This was the highest earnings since the second quarter of 2022, according to LSEG data.
SK Hynix attributed the strong performance to “growth in sales of AI server products, driven by its leadership in AI memory technology including high-bandwidth memory” and efforts to drive profitability.
SK Hynix is the world’s second-largest memory chip maker after Samsung Electronics, supplying high-bandwidth memory chips to companies such as artificial intelligence chipsets. Nvidia.
Explosive demand for AI chipsets has boosted the development of the high-end memory chip market, benefiting companies such as SK Hynix and Samsung Electronics.
Large language models like ChatGPT — which has led to a surge in AI adoption — require a large number of high-performance memory chips because such chips allow these models to remember details of past conversations and user preferences to generate human-like responses.
To meet demand for artificial intelligence memory, the company said it plans to increase supply of the latest generation of artificial intelligence high-bandwidth memory HBM3E. SK Hynix said it will launch 32GB double data rate 5 products this year to strengthen its leadership in the large-capacity server DRAM market.
“We will continue to work hard to improve our financial performance by delivering the industry’s best-performing products at the right time and maintaining our commitment to being profitable first,” said Chief Financial Officer Kim Woohyun.
The company expects the overall memory market to grow steadily in the coming months as demand for AI memory continues to grow, while the traditional DRAM market will begin to recover in the second half of 2024.
Pandemic-induced demand for consumer electronics has led companies to stockpile memory chips. However, macroeconomic uncertainties such as inflation have led consumers to reduce purchases of such consumer goods, thus depressing memory chip demand and prices.
To deal with excess inventory, companies such as SK Hynix have reduced production of memory chips.
Shares of SK Hynix fell more than 4% on Thursday morning, despite gains of more than 100% over the past year.
Artificial intelligence needs capturing
The company has made some recent announcements to address the demand for artificial intelligence.
The company said on Wednesday that it plans to build a new wafer fab in South Korea to ramp up production of next-generation DRAM with HBM to meet growing demand for artificial intelligence chips, with an expected completion date of November 2025.
SK Hynix said the total investment will exceed 20 trillion won in the long term.
SK Hynix also cooperates with TSMC, the world’s largest contract chip manufacturer, to develop high-bandwidth Memory 4 chips and next-generation packaging technology. HBM4 chips are expected to begin mass production in 2026.
According to an April 19 statement, SK Hynix will use TSMC’s leading processes.
Tags: Nvidia supplier Hynix reverses firstquarter loss explosive demand
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