SK hynix Inc. reported its highest quarterly profit in six years on Thursday, fueled by solid sales of its premium memory chips used in artificial intelligence (AI) computing.

The world’s second-largest memory chipmaker posted an operating profit of 5.46 trillion won (US$3.95 billion) for the April-June period, compared with a loss of 2.88 trillion won a year ago, the company said in a regulatory filing.

It marked the largest quarterly operating profit since the third quarter of 2018, when SK hynix reported 6.47 trillion won in operating profit.

Its revenue surged 124.8 percent to a record 16.42 trillion won, while its net profit reached 4.12 trillion won, shifting from a loss of 2.98 trillion won a year earlier.

The earnings beat market expectations. The average estimate of net profit by analysts stood at 3.85 trillion won, according to a survey by Yonhap Infomax, the financial data firm of Yonhap News Agency.

SK hynix attributed the strong bottom line to demand for AI memory chips, including high bandw
idth memory products and embedded solid state drives (eSSDs), and a rebound in prices of NAND flash memory.

“Continuous rise in overall prices of DRAM and NAND products with strong demand for AI memories including HBM led to a 32 percent increase in revenues compared to the previous quarter,” SK hynix said in a release, adding favorable exchange rates also mattered in the second quarter.

In particular, sales of HBM soared more than 80 percent on-quarter and 250 percent on-year following the mass production of latest HBM3E products in March.

For the NAND business, the company said sales of eSSD products vaulted 50 percent on-quarter, turning to profit for two straight quarters, on a steady increase in the average selling price (ASP) of NAND products.

SK hynix said the demand for AI server memory is forecast to continue to rise in the second half, and sales of high-performance memory products will also increase thanks to new PC and mobile products supporting on-device AI.

“We plan to continue our leadershi
p in the HBM market by mass-producing 12-layer HBM3E products, which the company provided samples to major customers, in the third quarter,” it said.

SK hynix is a key HBM supplier to the U.S. AI chip giant Nvidia Corp., a major player in the artificial intelligence (AI) semiconductor market with its graphics processing units.

SK hynix expected that revenues of HBM will increase by 300 percent on-year this year thanks to increased production capacity and booming demand, and the latest 12-layer HBM3E chips will lead the company’s sales next year.

“In the third quarter, the fifth-generation HBM3E shipments will outnumber that of the fourth-generation HBM3 and account for half of total HBM shipments,” the company said in an earnings call. “In the first half of next year, supply of 12-layer HBM3E products will outnumber that of eight-layer ones.”

The sixth-generation HBM4 will be shipped from the second half of next year, it added.

In the second half of the year, the company plans to launch 32 gigabit DDR5 s
erver D-RAMs and other memory products, such as MCRDIMM, for high-performance computing to maintain its competitive advantage.

It will also expand the sales of high-capacity eSSD products, which are in growing demand, to lead the market. This year’s revenues from eSSD sales are expected to quadruple from a year ago, it added.

Consequently, the better-than-expected second-quarter earnings helped market analysts predict SK hynix will post annual sales of 69.2 trillion won for 2024, up from 32.7 trillion won last year.

“SK hynix’s advantage in the high-end DRAM market will continue for a while,” said Kim Woon-ho, an analyst from IBK Securities Co. “Its product mix will outperform competitors, and favorable ASP will also help.”

Separately, SK hynix said it is working on the construction of its new facility in Cheongju, some 114 kilometers south of Seoul, aimed at keeping up with the growing demand for AI memory chips. The Cheongju plant is scheduled to start mass production in the second half.

The first fab
in the Yongin semiconductor cluster is planned to start construction in March next year and be completed in May 2027, it added.

The company noted its annual investment is expected to be higher than planned at the beginning of the year on its investment plan based on analysis of customer demand and profitability.

“The company will further solidify the position as a leader in AI memory products by focusing on developing the best process technology and high-performance products based on a stable financial structure,” the company said.

Source: Yonhap News Agency