Nvidia and Micron Get a Boost as SK Hynix Posts Record Profits Amid Persistent AI Boom

SK Hynix, key supplier to Nvidia and a competitor to Micron, has posted record Q3 earnings, affirming that the AI boom is far from over and demand remains overwhelming. 

The second-largest memory chipmaker reported a 94% year-over-year revenue increase to 17.57 trillion won ($12.7 billion), with an operating profit of 7.03 trillion won ($5.1 billion), setting new records for the company.

The company emphasized strong demand for memory chips for AI servers, with High Bandwidth Memory (HBM) accounting for 30% of DRAM revenues in Q3 and forecasted to reach 40% in Q4. The average selling price of both DRAM and NAND rose by mid-10% compared to the previous quarter, contributing to the highest operating profit in the company's history.

As a result, AI-related semiconductor stocks saw a pre-market boost, with Nvidia rising more than 1% and Micron jumping 1.6%.

SK Hynix expects the AI trend to persist into next year, driven by the development of generative AI into a multi-modal form and continued investment by global big tech companies in artificial general intelligence.

Contrary to concerns about an oversupply of chips used in generative AI, SK Hynix stated that production of higher-margin HBM chips is limited due to technological challenges, while demand is stronger than expected.

We believe that it is premature to talk about demand slowdown for AI chips and HBM at this point, said Kim Kyu Hyun, SK Hynix's head of DRAM marketing, during a conference call, citing ever-increasing requirements for computing power.

SK Hynix also announced plans to begin supplying its 12-layer HBM3E chips, which have 50% more capacity than the previous eight-layer chips, in the fourth quarter. It is rumored that Nvidia will use these 12-HI HBM3E chips for its Blackwell Ultra and AMD's MI325X. Micron also stated that its 12-Hi HBM3E chips are ready for production as of September, targeting Nvidia's H200 and B100/B200 GPUs, potentially benefiting from overall GPU demand. 

SK Hynix also forecasts steady growth in the PC and mobile product markets next year as AI-optimized memory for each device is released.

"As the application of AI technology widens, the application of memory is also expected to broaden, leading to even more stable market growth for memory going forward," said Kim.