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AI Demand Fuels SK Hynix's Record Profits and Ambitious Expansion Plans

Word on the StreetWednesday, Oct 23, 2024 11:00 pm ET

1min read

SK Hynix, the world’s second-largest memory chipmaker, has reported record-breaking quarterly profits and revenues, underscoring the surging demand for AI-related memory chips. The company's Q3 fiscal report demonstrated a remarkable financial turnaround, with an operating profit of 7.03 trillion Korean won (approximately $5.09 billion), up from last year’s loss of 1.79 trillion won. Sales soared 94% to 17.6 trillion won, while net profit reached 5.75 trillion won, reversing a prior year’s loss of 2.18 trillion won.

The stellar performance is attributed to the widespread adoption of high-bandwidth memory (HBM) and embedded SSDs, particularly for data centers focusing on AI applications. HBM product sales saw a significant year-over-year increase of over 330%, highlighting the strong market need for advanced AI-oriented products.

Anticipating continued growth in AI-driven memory, SK Hynix plans to enhance its capital expenditures beyond previous forecasts, to keep pace with expanding AI hardware needs. The company has announced major investment initiatives, including a $3.87 billion plan for an advanced packaging plant and AI product R&D center in Indiana, USA. Additionally, in South Korea, SK Hynix is investing $14.6 billion in a new memory chip complex with support for the domestic semiconductor sector.

On the technology front, SK Hynix aims to transition quickly to next-generation HBM3E products, with plans to commence supply in Q4. This strategic shift is likely to increase the HBM revenue contribution to 40% of DRAM sales in the upcoming quarter. Concurrently, the company is advancing its NAND flash memory sales, focusing on high-capacity eSSDs amid growing market demand.

SK Hynix is well-positioned to capitalize on its industry-leading AI memory technologies, underscoring its commitment to scaling revenue through high-value product sales. With its stock price having risen over 36% this year, the company maintains a competitive edge over rivals such as Samsung and Micron, securing its leadership in the AI memory market.

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