SK Hynix, one of the world’s largest memory chipmakers, reported a record quarterly profit for the third quarter, driven by the surging demand for high bandwidth memory (HBM) used in generative AI. The South Korean company posted an operating profit of 7.03 trillion won ($5.08 billion), exceeding market expectations of 6.8 trillion won, and rebounding from a loss of 1.8 trillion won in the same period last year. Revenue reached 17.57 trillion won ($12.7 billion), a 94% increase from the 9.1 trillion won posted in the third quarter of 2022, although it fell slightly short of forecasts.
SK Hynix, a key supplier to Nvidia, has significantly benefitted from the increasing demand for AI servers and components. Sales of its HBM products were up over 70% from the previous quarter and have tripled compared to the same period last year. HBM chips, which stack memory vertically to reduce power consumption, are essential in AI applications. The company expects this growth to continue as generative AI technology advances and large tech companies continue their investments.
In its earnings release, SK Hynix noted that strong demand for AI memory, particularly from data center customers, allowed it to expand sales of premium products like HBM and eSSD. The firm also projected that the demand for memory in AI servers will maintain this upward trend into 2024. Additionally, SK Hynix forecasted growth in memory demand from the PC and mobile markets as AI-optimized devices become more prevalent.
Last month, SK Hynix began mass production of its latest version of HBM chips, targeting delivery by the end of the year. The company’s shares initially dropped 0.4% following the earnings report but recovered to trade up 1.3% later in the day.
