The entrance to SK hynix in Seongnam, south of Seoul. (Image courtesy of Yonhap)
SEOUL, Oct. 25 (Korea Bizwire) – SK Hynix reported its highest-ever quarterly revenue and a dramatic return to profitability in the third quarter, driven by surging demand for artificial intelligence memory chips.
The South Korean memory chip maker announced on October 24 that its revenue jumped 93.8% year-over-year to 17.57 trillion won in the July-September period, while operating profit reached 7.03 trillion won, significantly exceeding market expectations of 6.76 trillion won.
The company’s stellar performance was largely attributed to increased sales of its high-bandwidth memory (HBM) chips, a high-value product crucial for AI applications.
HBM’s share of SK Hynix’s DRAM sales has grown dramatically, from single digits last year to over 30% in the third quarter of 2023. HBM sales increased more than 70% from the previous quarter and 330% compared to the same period last year.
The strong results were bolstered by continued robust demand from Nvidia, a key customer maintaining its leadership in the AI market. The company has significantly increased shipments of its fifth-generation HBM3E 8-layer chips to Nvidia.
Additionally, growing demand for enterprise SSDs and other AI server memory products contributed to the improved performance.
“We achieved record revenue by expanding sales of high-value products like HBM and enterprise SSDs in response to sustained strong AI memory demand from data center customers,” SK Hynix said. The company noted that average selling prices for both DRAM and NAND products rose by more than 15% quarter-over-quarter.
Looking ahead, SK Hynix expects continued strong performance in the fourth quarter, supported by rising HBM prices. Market research firm TrendForce forecasts DRAM prices, including HBM, to increase by 8-13% in the fourth quarter.
The company began mass production of its HBM3E 12-layer products last month, with deliveries scheduled to begin in the fourth quarter as planned. SK Hynix President Kwak Noh-jung recently confirmed that the production and delivery timeline for HBM3E 12-layer chips remains on track.
The chip maker also plans to expand sales of high-capacity enterprise SSDs in its NAND business while maintaining focus on investment efficiency and production optimization.
SK Hynix noted that the development of generative AI toward multimodal applications and continued investment in artificial general intelligence (AGI) by global tech companies are expected to sustain strong demand into next year.
Kevin Lee (kevinlee@koreabizwire.com)
