Addressing concerns about a potential oversupply of chips utilized in generative AI applications, SK Hynix emphasized that the production of higher-margin HBM chips is constrained by technological hurdles, while demand remains stronger than anticipated.
"It is too early to discuss a slowdown in demand for AI chips and HBM at this stage," stated Kim Kyu Hyun, head of DRAM marketing at SK Hynix, during a conference call, highlighting the growing need for enhanced computing power.
As the world's second-largest memory chip manufacturer, SK Hynix reported an operating profit of 7 trillion won ($5.07 billion) for the July-September period, a significant turnaround from a loss recorded a year prior. This figure surpassed the average forecast of 6.8 trillion won from LSEG SmartEstimate, which favors analysts with a track record of accuracy.
In recent quarters, SK Hynix has outperformed competitors Samsung Electronics and Micron Technology, largely due to its early investments and strategic focus on HBM chip development, which have positioned it well to meet the AI-driven demand for high-performance memory.
Earlier this month, Samsung cautioned that its third-quarter profits would fall short of market expectations, attributing the disappointing results to delays in the sales of its high-end HBM3E chips to a major customer, whose identity remains undisclosed.
On Wednesday, Nvidia CEO Jensen Huang announced that a design flaw affecting the production of its latest Blackwell AI chips had been resolved with assistance from Taiwanese manufacturing partner TSMC. Analysts note that these AI chipsets utilize HBMs produced by SK Hynix.
SK Hynix reported a significant increase in HBM sales, which rose over 70% compared to the previous quarter. The company's total revenue for the quarter surged by 94% year-on-year, reaching 17.6 trillion won.
"SK Hynix has solidified its competitive position in the HBM sector. Its status as a leading HBM chip supplier is expected to persist into the next year," stated Ko Yeongmin, an analyst at Daol Investment & Securities.
As of 0318 GMT, SK Hynix shares were up 2.3%, contrasting with a 0.1% decline in the benchmark KOSPI.
This year, SK Hynix's stock has risen by 38.5%, while Samsung's shares have decreased by 24.7%, with a 2% drop noted on Thursday.
The company anticipates that HBM sales will account for 40% of its total DRAM revenue in the fourth quarter, an increase from 30% in the third quarter. Additionally, it expects a further rise in memory chip demand for AI servers next year, driven by global tech firms' efforts to advance generative AI.
To meet the unexpectedly high demand for HBM, the chipmaker plans to boost its capital expenditures to the mid-to-high 10 trillion won range, with a slight increase projected for 2025, according to CFO Kim Woo Hyun.
Last month, SK Hynix, the primary supplier of HBM chips to Nvidia, announced the commencement of mass production of HBM3E 12-layer chips, with plans to deliver these latest products to undisclosed customers by the end of this year.