Written by Joyce Lee and Heekyung Yang
SEOUL (Reuters) – South Korea's SK Hynix expects a full recovery in memory chips due to AI demand, selling advanced DRAM chips with high-bandwidth memory (HBM) for generative AI chipsets The company said it had recorded its highest profit in nearly two years. .
The world's second-largest memory chip maker reported operating profit of 2.89 trillion won ($2.1 billion) for the March quarter, compared with a loss of 3.4 trillion won in the same period last year. That beat the 1.88 trillion won forecast by LSEG SmartEstimate, which weighs analysts for being more consistently accurate. .
SK Hynix said, “Due to the continued strength of AI demand, the memory market is entering a full recovery cycle.”
Hynix says chipmakers are concentrating production capacity on chips to meet AI-driven demand, and if demand for high-tech devices exceeds expectations, regular memory chips for smartphones, personal computers and network servers will be available by the end of the year. There is a possibility that there will be a shortage.
Thursday's results marked Hynix's second-highest profit for the January-March period on record, as the global memory chip sector suffered its worst slump in decades and was hit by a recession. This was a rapid recovery from the huge losses incurred by the third quarter of 2023. The demand for technological devices has increased since the coronavirus outbreak.
AI boom
Among memory chip makers, SK Hynix has been the biggest beneficiary of the explosion in AI adoption, as it has become a major supplier of HBM chips for Nvidia's graphics processing units that train AI systems.
SK Hynix is the sole supplier of HBM3 to Nvidia, which controls 80% of the AI chip market, and has begun mass production of the latest version of the HBM chip, called HBM3E, and shipped it to the US company.
But rival Micron has also said its HBM chips will be sold out in 2024 and most of its 2025 supply has already been allocated, and industry number one Samsung Electronics has also said its latest and most powerful HBM chips will be sold out in 2024. The company said it plans to ship the product in the third quarter.
“HBM's competition will intensify, sales prices will fall, and SK Hynix's market share is likely to decline from the second half of this year,” said Park Yu-ak, an analyst at Kiwoom Securities.
To stay ahead of the curve, SK Hynix this month announced a $3.87 billion investment to build an advanced chip packaging factory in Indiana with an HBM chip line, as well as a new Korean DRAM chip with an emphasis on HBM. announced an investment of 5.3 trillion won for the construction of the factory.
The company plans to work with TSMC to develop the next version of the HBM chip, called HBM4, and chip packaging that will allow it to manufacture custom HBM chips.
The company's NAND flash chip business turned profitable in the first quarter as demand for enterprise solid-state drives (eSSDs) surged from on-premises AI data centers looking for storage drives that can handle high loads and consume less power.
SK Hynix said its Dalian factory in China is producing 144-layer and 192-layer NAND flash chips to meet this new AI-driven demand.
(1 dollar = 1,374.6200 won)
(Reporting by Joyce Lee and Heekyung Yang; Editing by Kim Coghill, Sonali Paul and Tom Hogue)
