(Bloomberg) -- SK Hynix Inc. posted record quarterly profit and revenue, reflecting strong demand for the memory chips used with Nvidia Corp. processors for artificial intelligence development.
The South Korean chipmaker revealed a better-than-projected operating profit of 7.03 trillion won ($5.1 billion) in the September quarter, after revenue almost doubled. And it projected mid- to high-teens growth in demand for DRAM and Nand flash memory chips in 2025, suggesting it expects a sustained recovery for the broader market.
The company’s shares slid about 1% in Seoul. The stock had gained more than 35% this year as the company widened its lead over Samsung Electronics Co. and Micron Technology Inc. in supplying the cutting-edge high-bandwidth memory that powers Nvidia’s AI accelerators. Investors had largely anticipated strong results and the stock’s had a great run, according to Song Myung-Sup, a senior analyst at iM Securities Co.
Nvidia affirmed Thursday it plans to begin supplying its top-of-the-line 12-layer HBM3E in the fourth quarter. That should help boost the proportion of HBM sales in overall memory revenue to 40% from 30%. Away from AI, Hynix and its rivals are still grappling with the after-effects of a prolonged slump in the business of computing and smartphone memory.
“SK Hynix’s results show that it’s focusing on premium products when some legacy chip prices are falling,” said Greg Roh, an analyst with Hyundai Motor Securities Co. “That demonstrates the company has the technology and capability to focus on where it can make money.”
What Bloomberg Intelligence Says
SK Hynix’s 3Q operating-profit margin could have improved from 2Q due to better average selling prices (ASP) for DRAM chips, as Micron’s ASP climbed 15% in the previous quarter. SK Hynix’s dominant market share in high bandwidth memory (HBM) chips might have contributed to the solid operating margin, although demand for standard DRAM may be slowing down due to smartphones and PCs. ASP for NAND chips could have risen slightly along with Micron.
- Masahiro Wakasugi, analyst
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Earnings also got a boost from robust demand for enterprise solid-state drives, used in large companies’ data centers.
SK Hynix has said its capital expenditure this year would likely top earlier plans, to keep pace with a boom in spending on AI hardware. On Thursday, it said capital spending should rise in 2025.
The Icheon-based company has announced a slew of investment plans this year, including $3.87 billion to build an advanced packaging plant and research center for AI products in Indiana.
At home, it’s spending $14.6 billion building a new memory chip complex and proceeding with other domestic investments, including the government-backed Yongin Semiconductor Cluster project.
--With assistance from Youkyung Lee.
(Updates with share action from the second paragraph.)
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