SK hynix Q2 earnings soar to record high on AI chip boom

Chipmaker set to kick off mass production of 12-layer HBM3E products in Q3

An aerial view of SK hynix's semiconductor line in Icheon, Gyeonggi Province. (SK hynix)

SK hynix, the world’s second-largest memory chip maker by revenue, said Thursday it logged all-time-high sales of 16.4 trillion won ($11.8 billion) in the April-June period this year, riding on the robust demand for artificial intelligence chips.

Reporting the second quarter's earnings, the company said it will supply the cutting-edge 12-layer HBM3E chips to customers before the end of the year, keeping its dominance in the burgeoning AI chip market.

The operating profit posted 5.46 trillion won, surpassing the 5-trillion-won mark in six years and performing to the level of the chip super boom that occurred in 2018, the company said. Net profit stood at 4.12 trillion won.

"The strong demand for advanced AI memories such as the High Bandwidth Memory chip in the fast-growing AI market, and the continuous rise in overall prices of DRAM and NAND flash memory led to an on-quarter increase of 32 percent in revenues," SK hynix Chief Financial Officer Kim Woo-hyun said during an earnings call for the second quarter.

In the DRAM area, SK hynix increased the proportion of high-value-added products such as 8-layer HBM3E and DRAM for servers that came in high demand for their critical usage in advanced AI applications.

Developing the industry's first HBM chips in 2013 and mass producing the latest 8-layer HBM3E products in March this year, SK hynix has been dominating the market that recently started to bloom on the back of generative AI boom. According to the chipmaker, its HBM sales went up by more than 80 percent on-quarter and more than 250 percent on-year.

"SK hynix plans to continue its leadership in the HBM market by mass-producing 12-layer HBM3E products in the third quarters, and delivering them to customers in the fourth quarters," Kim Kyu-hyun, head of DRAM Marketing said.

He added that the demand for the 12-layer product is expected to exceed that of the 8-layer product in the first half of next year. The company provided samples to major customers in May.

For the sixth-generation 16-layer HBM4 product, the chipmaker predicted the demand to occur from 2026 and said it is preparing to supply them on time.

For the next-generation product that requires more elaborate production technology, the company said it may consider adopting hybrid bonding technology. SK hynix currently adopts the MR-MUF technology to produce its HBM products.

For the NAND business, the sales of enterprise SSDs grew sharply and rose by about 50 percent to lead to profit, adding to the rise in the average selling price of other NAND products, the company said.

For the second half of the year, the chipmaker offered a rosy outlook with the demand for AI server memory continue rising, and the sales of high-performance memory products increasing as new PC and mobile devices supporting ondevice AI will be released on the market. The company also predicted the general memory product market to be on a steady growth path as well.

SK hynix also noted its capital expenditure may increase from its initial plan made at the beginning of the year, due to higher-than-expected HBM demand and for its new plan to secure cleanrooms for mid- to long-term operations.

Last month, the chipmaker announced its plan to invest 103 trillion won by 2028, with 80 percent of it focusing on AI chips including HBM.

On the concerns that the company's increased investment may lead to oversupply in the market, the company explained the CAPEX will be focused on HBM production, which is based on orders already secured.

"Investment plans for HBM products are based on yearly contracts, so an increase in investment means an increase in orders," the DRAM marketing chief said, dispelling the concern.

The construction of Cheongju M15X plant is going as planned, and the company aims to start mass production in the second half of next year, SK hynix said. The construction of SK hynix' first fab in the Yongin semiconductor cluster will also proceed in March next year, and completed in May 2027 as scheduled.

By Jo He-rim(herim@heraldcorp.com)