With record revenue, SK hynix brushes off suggestion of AI chip oversupply

How embarrassing for Samsung

SK hynix posted on Wednesday what it called its "highest revenue since its foundation" for Q3 2024 as it pledged to continue minuting more AI chips.

Revenue totaled ₩17.6 trillion ($12.7 billion), up 94 percent year-on-year. Operating profit stood at ₩7 trillion ($5 billion) after only last year reporting a ₩1.8 trillion ($1.3 billion) loss in the same quarter. Net profit was ₩5.8 trillion ($4.2 billion) with a margin of 33 percent.

All three values were described as "new records."

SK hynix attributed the stellar results to expanded sales of premium products like high-bandwidth memory (HBM) used in AI and enterprise solid-state drives (eSSD) for datacenters, but mainly HBM as the chip sales were up 330 percent year-on-year and made up 30 percent of all DRAM revenue.

eSSD NAND revenue share reached over 60 percent.

The company said that it would continue to focus on these high-value chips next year as well, with 12-layer HBM3E starting to replace eight-layer in Q4. It expects HBM to make up 40 percent of all DRAM revenue in Q4.

During the earnings call, CFO Kim Mohan said the company was on track to double HBM capacity this year, compared to last, even as production capacity was hitting its limits.

The promise is sure to keep Nvidia happy as it has promised investors continual ramping up of GPUs.

He also brushed off the notion that so much rush to meet demand could create an oversupply.

"Unlike general DRAM, HBM has a long-term contract structure with volume and pricing negotiations already completed for 2025," argued Mohan. "We have high visibility on demand, and given the strong demand for AI chips, we believe HBM demand will be higher than currently anticipated."

As for PC and mobile products, the company admitted demand had been slow to recover compared to memory for AI servers, but predicted steady growth next year as AI memory becomes optimized for individual devices.

However, the market segment, along with new entrants in the legacy market, was creating price volatility, according to Mohan.

He made a differentiation between legacy products like DDR4 and HBM or LPDDR5, and said the company expected its blending average selling price to "continue improving due to the increasing share of high-value products like HBM."

Earlier this month, Samsung's performance was so bad that its execs formally apologized, a rare action from the chaebol.

SK hynix has yet to release its full results, which are expected October 31. Samsung's preliminary results showed it missed profit expectations. Its report listed ₩9.1 trillion ($6.8 billion), a number almost ₩1 trillion ($725 million) less than the expected ₩10 trillion ($7.4 billion). ®