TLDR:
- SK Hynix reported a surprise profit in the fourth quarter, driven by strong demand for high-end memory semiconductors used in artificial intelligence (AI) chipsets.
- The company aims to become a “total AI memory provider” and plans to focus on developing advanced DRAM chips like high bandwidth memory (HBM) chips.
- SK Hynix’s lead in HBM chip development is set to help it improve profitability and outperform the market this year.
- The company’s shares fell in response to profit-taking, despite an optimistic outlook for AI memory chips.
- Chip prices are expected to improve this year as clients restock and manufacturers cut legacy chip production.
- Bigger rival Samsung Electronics is also expected to report improving memory chip demand in its fourth-quarter results.
South Korean semiconductor manufacturer SK Hynix surprised investors with a fourth-quarter profit, driven by strong demand for high-end memory semiconductors used in AI chipsets. The company reported an operating profit of $259.8 million for the October-December quarter, beating expectations for an operating loss. Revenue also soared by 47%. SK Hynix, which is the world’s second-biggest memory chipmaker and counts Nvidia as a key client, plans to focus on developing advanced dynamic random-access memory (DRAM) chips, particularly high bandwidth memory (HBM) chips. Its sales of HBM3 chips, which it developed ahead of rivals, increased more than fivefold in 2023. This puts SK Hynix in a favorable position to benefit from the growing demand for AI chipsets, as more companies incorporate AI functions into their devices.
SK Hynix aims to become a “total AI memory provider” and plans to continue developing its HBM chip technology. The company intends to begin mass production of its next HBM version, called HBM3E, in the first half of this year, and it is also working on the next-generation chip, HBM4. Analysts predict that HBM chips will account for 15% of industry-wide DRAM sales in 2024, up from 8% in 2023. Despite the positive outlook for AI memory chips, SK Hynix’s shares fell 2.6% in response to profit-taking. However, chip prices are expected to improve this year as clients restock, and manufacturers continue to cut legacy chip production. Samsung Electronics, SK Hynix’s bigger rival, is also expected to report improving memory chip demand in its fourth-quarter results.