SK Hynix’s Q3 profit soars to record high, beats Samsung’s memory profit

SK Hynix Inc., the world’s second-largest memory chipmaker, on Thursday posted record quarterly profit and sales, driven by premium artificial intelligence memory products such as high-band memory (HBM), a key component of Nvidia Corp.’s AI chips.

The South Korean chipmaker said in a regulatory filing that its third-quarter operating profit reached an all-time high of 7.03 trillion won ($5.09 billion) on a consolidated basis, a turnaround from a loss of 1.79 trillion won a year earlier.

Its operating profit margin stood at a whopping 40%.

With its record third-quarter profit, SK Hynix, which produces only memory chips – DRAM and NAND – outperformed bigger rival Samsung Electronics Co., which likely posted about 4.4 trillion won quarterly profit in its semiconductor business.

Earlier this month, Samsung, which also makes smartphones and home appliances, said its overall operating profit reached 9.1 trillion won in the July-September quarter. Although it didn’t provide a breakdown, analysts estimated its chip business profit between 4 trillion won and 4.4 trillion won.

SK Hynix said third-quarter sales nearly doubled to a record 17.57 trillion won from 9.1 trillion won.

Its net profit also reached an all-time quarterly high of 5.75 trillion won, a turnaround from a net loss of 2.18 trillion won in the year-earlier period.

The results, which came in above market expectations, also beat its earnings during the semiconductor super-boom in 2018.

The company attributed its spectacular results to robust sales of premium products such as HBM and high-end NAND flash memory, including enterprise solid-state drives (eSSDs).

“SK Hynix has solidified its position as the world’s No.1 AI memory company,” said Kim Woo-hyun, vice president and chief financial officer. “We will continue to maximize profitability while securing stable revenue by implementing flexible product and supply strategies in line with market demand.”

HBM, A CASH COW

HBM chips are the key source of revenue and profit for SK Hynix as the company has benefited the most from AI-driven appetite for high-end memory chips from the likes of Nvidia and Advanced Micro Devices Inc. (AMD).

"HBM sales showed excellent growth, up more than 70% from the previous quarter and more than 330% from the same period last year," SK Hynix said in a statement.

The company sees HBM sales making up 40% of its total DRAM revenue in the fourth quarter, up from 30% in the third quarter. It expects memory chip demand for AI servers to grow further next year as global tech companies continue to develop generative AI.

Last month, the main supplier of HBM chips to Nvidia said it had started mass production of the more advanced HBM3E 12-layer chips and plans to supply the latest products to Nvidia and other customers from the fourth quarter as scheduled.

As a result, HBM sales, which accounted for 30% of its total DRAM revenue in the third quarter, will rise to 40% in the fourth quarter, according to the company.

As sales increased mainly on highly profitable premium products, the average selling price of both DRAM and NAND rose in the mid-10% range compared to the previous quarter, it said.

Q4 & 2025 OUTLOOK

While memory demand for AI servers such as HBM and eSSD has grown noticeably this year, SK Hynix expects this trend to continue in the fourth quarter of this year and into 2025.

“Generative AI is developing into a multi-modal form and global big tech companies continue to invest to develop artificial general intelligence, which will continue to drive up our earnings and sales,” it said.

SK Hynix also predicted that the PC and mobile product markets, in which demand recovery had been slow, will be on a steady growth path next year.

TrendForce, the Taiwan-based semiconductor research firm, expects the HBM market to continue to post strong growth next year, driven by soaring demand from Nvidia and other AI chipmakers.

During the TrendForce Roadshow Korea held in Seoul on Tuesday, Avril Wu, senior vice president of research operations at TrendForce, said she expects the global HBM market to grow 156% next year to reach $46.7 billion, from $18.2 billion this year.

Shares of SK Hynix were up 1.1% at 198,100 won in early Thursday trade in Seoul, outperforming the broader benchmark Kospi index’s 0.3% decline.

SK Hynix shares have jumped 38.5% so far this year, while Samsung's have slumped 24.7% over the same period.

Write to Jeong-Soo Hwang at hjs@hankyung.com

In-Soo Nam edited this article.