Nvidia supplier SK Hynix posts 6-year high profit on AI boom

SEOUL :South Korea’s SK Hynix posted its highest quarterly profit since 2018 on Thursday as the Nvidia seller acknowledged solid AI chip do a question to will simplest get stronger, equivalent to for excessive bandwidth memory (HBM) venerable in generative AI chipsets.

“AI do a question to continues to develop above expectations… We quiz next yr’s HBM shipments to extra than double this yr’s,” Head of DRAM Advertising and marketing and marketing Kim Kyu Hyun acknowledged in an earnings name.

On the opposite hand, SK Hynix shares dropped as noteworthy as 8.4 per cent in morning commerce, monitoring declines in U.S. shares equivalent to Nvidia, as tech companies’ outcomes did no longer fulfill sky-excessive investor expectations.

The enviornment’s 2d-finest memory chip maker has benefited primarily the most amongst peers from AI-pushed appetite for excessive-end chips and venture solid-narrate drives (eSSDs), following its early entry and mammoth funding within the segments.

The firm reported 5.47 trillion received ($3.96 billion) in operating profit for April-June, its highest since the third quarter of 2018.

The resolve in contrast with a loss of two.9 trillion received a yr earlier and used to be per the LSEG SmartEstimate, which is weighted toward analysts who are extra consistently staunch.

Income rose 125 per cent to a epic 16.4 trillion received.

AI DEMAND

Prices had been lifted by explosive do a question to for excessive-end DRAM chips equivalent to HBM, chips venerable in data centre servers and items that bustle on-gadget AI products and services.

“DRAM costs are rising no matter the lack of entire restoration in venerable purchaser do a question to, as chipmakers concentrate production capability on HBM,” CFO Kim Woohyun acknowledged.

SK Hynix leads the HBM market and is basically the major seller of those chips to Nvidia, in opponents with Samsung Electronics and the US’ Micron. Nvidia instructions some 80 per cent of the substitute intelligence chip market.

SK Hynix started mass production of fifth-technology HBM chips – known as HBM3E – in March, with initial shipments going to Nvidia, sources beforehand suggested Reuters.

On Thursday, the chipmaker disclosed plans to ship the next variations of HBM chips – the 12-layer HBM3E starting within the fourth quarter and the HBM4 starting within the 2d half of of 2025.

Samsung has but to meet Nvidia’s standards for HBM3E chips, despite the indisputable truth that Samsung’s fourth-technology HBM – dubbed HBM3 – has been cleared by Nvidia for employ in its less-refined graphics processors, the H20, developed for the Chinese market, sources delight in suggested Reuters.

“SK Hynix is saying this may well well aid its technical leadership, end sooner than opponents,” acknowledged analyst Lee Min-hee at BNK Investment & Securities. “But investor expectations are so excessive they may perchance presumably even be laborious to meet, and within the fast term, the stock worth may perchance well additionally no longer rise as noteworthy.”

HBMs may perchance well additionally fable for 20 per cent of SK Hynix’s profit for DRAM chips by the end of 2024, from nearly 0 per cent within the main half of of 2023, analysts acknowledged, given Nvidia is inclined to lunge up plans for next-technology graphics processors to meet soaring do a question to created by the generative AI boost.

In May possibly well, SK Hynix CEO Kwak Noh-Jung acknowledged its HBM chips had been supplied out for this yr and nearly supplied out for 2025.

One amongst South Korea’s top stock picks for the AI boost, SK Hynix shares delight in risen 47 per cent yr-to-date as of Wednesday.

($1=1,380.3400 received)