SK Hynix's signboard at the company's office in Seongnam, South Korea, on Monday, April 22, 2024. SK Hynix is scheduled to announce its financial results on April 25th. Photographer: SeongJoon Cho/Bloomberg via Getty Images
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South Korean memory chip maker SK Hynix on Thursday announced first-quarter net profit of 1.92 trillion Korean won ($1.39 billion), reversing a loss of 2.58 trillion won a year earlier.
This was the first positive profit recorded since the third quarter of 2022, according to LSEG data. SK Hynix posted a net loss for five consecutive quarters due to the slump in the memory chip market.
Sales for the first quarter were 12.43 trillion won, an increase of 144% compared to the same period last year. This was the highest revenue since the second quarter of 2022, according to LSEG data.
SK Hynix attributed its strong performance to “increased sales of AI server products backed by our leadership in AI memory technology, including high-bandwidth memory” and efforts to improve profitability.
SK Hynix is the world's second-largest memory chip maker after Samsung Electronics, supplying high-bandwidth memory chips for AI chipsets from companies such as Nvidia.
Explosive demand for AI chipsets has expanded the high-end memory chip market, greatly benefiting companies such as SK Hynix and Samsung Electronics.
Large language models such as ChatGPT, which has sparked a surge in AI adoption, require large amounts of high-performance memory chips. This is so that these models can remember details of past conversations and user preferences in order to generate human-like responses.
To meet the demand for AI memory, the company said it plans to increase the supply of HBM3E, the latest generation of high-bandwidth memory for AI. SK Hynix announced that it will also introduce five 32GB double data rate products this year to strengthen its leadership in the large-capacity server DRAM market.
Chief Financial Officer Kim Woo-hyun said, “We will continue to strive to improve our business performance by providing the industry's best-performing products at the right time and maintaining our focus on profitability.'' Stated.
The company predicts that while the traditional DRAM market will start to recover from the second half of 2024, the overall memory market will grow steadily in the coming months as demand for AI memory increases.
Demand for consumer electronics caused by the pandemic has led companies to stockpile memory chips. However, macroeconomic uncertainties such as inflation led consumers to refrain from purchasing such consumer goods, causing demand and prices for memory chips to fall.
To deal with excess inventory, companies like SK Hynix have cut back on memory chip production.
SK Hynix stock price fell more than 4% Thursday morning, but has risen more than 100% over the past year.
The company recently made an announcement to meet the demand for AI.
The company announced on Wednesday that it plans to build a new factory in South Korea to increase production of next-generation DRAM, including HBM, to capture surging demand for AI chips, with an expected completion date set for November 2025. did.
According to SK Hynix, the total investment will be over 20 trillion won in the long term.
SK Hynix is also partnering with TSMC, the world's largest contract chip manufacturer, to build high-bandwidth memory 4 chips and next-generation packaging technology. Mass production of HBM4 chips is scheduled to begin in 2026.
According to an April 19 statement, SK Hynix plans to utilize TSMC's cutting-edge processes.
