SK Hynix Reports Record Quarterly Results
SK Hynix Inc. reported a record-breaking operating profit of 8.08 trillion won ($5.6 billion) for the December quarter. This represented a more than 20-fold increase from the previous year and outpaced rival Samsung Electronics Co. for the first time.
Despite this milestone, SK Hynix shares dropped over 2%, as investors cashed out following a significant 30% rally earlier this year.
AI-Fueled Growth Drives SK Hynix’s Success
The company’s impressive performance underscores its dominance in high-bandwidth memory (HBM) chips, which are essential for training AI models on Nvidia’s accelerators. HBM accounted for 40% of SK Hynix’s DRAM revenue in the quarter, reflecting a growing reliance on AI-driven data centers.
Global tech firms, including Microsoft and Meta, continue to fuel demand for advanced memory products, and SK Hynix expects HBM sales to more than double in 2025.
Stargate Project Boosts Datacenter Demand
The recently announced $100 billion Stargate project, backed by firms like SoftBank, OpenAI, and Oracle, aims to revolutionize datacenter infrastructure. This venture, promoted by President Donald Trump, has invigorated market confidence, benefiting key players like SK Hynix and Nvidia.
Analysts predict SK Hynix will be a significant beneficiary of the project, thanks to its technological edge and strong production yields.
Competition Heats Up with Samsung and Micron
To maintain its market leadership, SK Hynix plans to introduce 16-layer HBM4 chips by 2026. Meanwhile, Samsung has announced its intent to mass-produce HBM4 chips by late 2025, intensifying competition in the high-end memory sector.
Both companies are racing to meet surging demand, with SK Hynix investing $15 billion in South Korea and $3.9 billion in Indiana to expand its production capacity.
Challenges from Weak Smartphone Demand
While AI-driven memory demand remains robust, SK Hynix faces challenges from a sluggish smartphone market, including muted iPhone sales. However, the company anticipates a second-half rebound driven by PCs and devices equipped with AI capabilities.
SK Group Chairman Chey Tae-won highlighted the company’s close collaboration with Nvidia to meet evolving market demands, further emphasizing its focus on AI products.
Outlook for SK Hynix in 2025
Bloomberg Intelligence suggests SK Hynix’s first-quarter results may see sequential declines in sales due to seasonal factors and weaker demand for non-AI applications. However, year-over-year growth remains strong, driven by the rising average selling price (ASP) of DRAM.
As the company ramps up production and innovation in HBM technology, it is well-positioned to capitalize on the continued expansion of AI infrastructure and datacenters.