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### SK Hynix Profits Soar Due to High Demand for Artificial Memory Chips

South Korean chipmaker highlights turnaround after year-long supply glut

As a result of the increasing demand for premium artificial intelligence memory cards, SK Hynix, a chipmaker, announced its first weekly operating profit in over two years.

During the three months leading up to December 31, the South Korean company, known for supplying “high bandwidth memory” chips utilized in Nvidia’s H100 graphics processing units, recorded an operating profit of Won346bn (\(260mn), surpassing analysts’ expectations of a \)192 billion loss compiled by LSEG SmartEstimates.

This marks a significant shift in the global memory sector’s trajectory, which had previously been plagued by a year-long oversupply issue, resulting in operating losses of Won1.9tn in the fourth quarter of 2022 and WON1.8Tn in the second quarter of 2023.

Chief financial officer Kim Woohyun highlighted the company’s strategic shift towards becoming a comprehensive artificial memory provider during discussions with experts on Thursday, attributing their success to their innovative leadership in the field.

Originally designed for high-end game graphics cards, HBM chips now command a substantial share of the dynamic random access memory market worldwide. These chips employ stacking technology to enhance the speed and efficiency of GPUs in high-performance computers.

Since introducing the world’s first HBM chip in 2015, SK Hynix has maintained a leading position, outpacing even Samsung Electronics, the dominant market player in South Korea.

SK Hynix’s CEO, Kwak Noh-jung, revealed plans to bolster the company’s market capitalization over the next three years to capitalize on the increasing demand for AI system training components.

With sales of its HBM3 device soaring by over 500% year-over-year, SK Hynix is gearing up for the mass production of its next-generation HPBM device this year. Furthermore, the company is developing an HBM4 device expected to double processing speeds.

In a recent statement, HSBC analysts identified Hynix as their preferred stock in the memory sector, citing its pure-play status and anticipating that Hynix will be a primary beneficiary of the memory market upcycle. They pointed to investments in AI server capacity and the potential surge in demand for on-device AI as key factors.

In comparison to the same quarter last year, SK Hynix reported a net loss of Won1.38tn in the third quarter, with revenues climbing by 47% year over year to Won11.3tn.

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Last modified: January 25, 2024
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