World’s No 2 memory chip maker SK Hynix reports surprise profit
- The world’s No 2 maker of memory chips reported an operating profit of 346 billion won (US$259 million) in the December quarter
- Chip makers are optimistic about a sector recovery, with Taiwan Semiconductor Manufacturing Co last week projecting strong revenue growth in 2024
SK Hynix reported a surprise operating profit boosted by strong sales of high-end memory chips used to power artificial intelligence (AI) applications.
The world’s No 2 maker of memory chips reported an operating profit of 346 billion won (US$259 million) in the December quarter, compared with analyst estimates for a 169.9 billion won loss. Revenue climbed to 11.3 trillion won, beating the highest forecast.
The company, which in December became South Korea’s second-most valuable, is the leader in high-bandwidth memory chips that work alongside Nvidia’s AI accelerators, used extensively in the training of AI. Investors are pinning their hopes on generative AI driving demand for servers that require more next-generation DRAM, or DDR5.
“Hynix achieved its first operating profit in five quarters and is the first company in its peer group within the memory industry to recover from a string of losses,” said Sanjeev Rana, an analyst at CLSA Securities Korea. “It is clear that ongoing improvement in product mix driven by higher contribution from HBM and a general recovery in commodity memory ASPs will continue to drive its profit recovery in the upcoming quarters.”
The memory maker is reporting days after larger rival Samsung Electronics unveiled disappointing numbers, reflecting a semiconductor market slump that has depressed margins for more than a year. Industry executives, however, have projected a gradual rebound starting 2024, especially as AI development accelerates and more services emerge that take advantage of new chip technology.
Chip makers are optimistic about a sector recovery, with Taiwan Semiconductor Manufacturing Co last week projecting strong revenue growth in 2024. ASML Holding, the sole maker of high-end lithography equipment key to manufacturing the most sophisticated semiconductors, closed at a record high Wednesday after orders more than tripled last quarter.
SK Hynix said it will boost capital spending in 2024 while aiming to minimise disruption to the demand-supply demand balance. And it will proceed with mass production of AI memory product HBM3E, focusing spending on high-bandwidth memory and other strategic products.
