SK Hynix, the South Korean memory chipmaker, made a remarkable turnaround in the first quarter of this year by reporting a net profit of 1.92 trillion South Korean won. This impressive figure marks a stark contrast from the 2.58 trillion won loss recorded in the same period a year ago. The company’s positive income in the first quarter of 2022 is a significant achievement, considering the five consecutive quarters of net losses it endured due to a slump in the memory chip market. With revenue standing at 12.43 trillion won, SK Hynix also saw a 144% increase from the previous year, representing the highest revenue recorded since the second quarter of 2022.
SK Hynix attributed its strong performance in the first quarter to an increase in the sales of AI server products, supported by its leadership in AI memory technology, particularly in high-bandwidth memory chips. These high-performance memory chips are crucial for AI chipsets used by companies such as Nvidia and are in high demand due to the explosive growth of AI adoption. Large language models like ChatGPT have contributed to this surge in demand, requiring high-capacity memory chips to store and retrieve vast amounts of data to generate humanlike responses. To meet the growing need for AI memory, SK Hynix plans to ramp up production of the latest generation of high-bandwidth memory, HBM3E, and introduce 32GB Double Data Rate 5 products to strengthen its position in the high-capacity server DRAM market.
Looking ahead, SK Hynix projects steady growth in the memory market driven by the increasing demand for AI memory. Additionally, the firm anticipates a recovery in the conventional DRAM market starting from the second half of 2024. Despite the challenges posed by macroeconomic uncertainties such as inflation impacting consumer spending on electronics, SK Hynix remains optimistic about the long-term prospects of the memory industry. In response to the changing market dynamics, the company has taken strategic measures to address excess inventories by cutting production of memory chips.
In a bid to capitalize on the growing demand for AI chips, SK Hynix announced plans to build a new fab in South Korea, scheduled for completion by November 2025. This facility will focus on increasing production of next-generation DRAM, including HBM, to cater to the rising demand for AI chips. With a total investment exceeding 20 trillion won in the long term, SK Hynix aims to position itself as a key player in the AI memory chip market. Furthermore, the company has partnered with TSMC, the world’s largest contract chip manufacturer, to develop high-bandwidth memory 4 chips and next-generation packaging technology. Mass production of the HBM4 chips is slated to commence in 2026, leveraging TSMC’s cutting-edge processes to drive innovation and competitiveness in the market.
SK Hynix’s success in reversing losses, achieving record profits, and positioning itself for future growth in the AI memory chip market underscores its commitment to innovation and strategic partnerships. By capitalizing on the surge in demand for high-performance memory chips driven by AI adoption, SK Hynix is poised to solidify its position as a leading player in the global semiconductor industry.