SK hynix Surpasses Samsung in Quarterly Profit, Driven by AI Memory Chip Demand

SK hynix's surpasses Samsung Electronics for 1st time in quarterly profit

SK Hynix headquarters in Icheon, Gyeonggi Province, is seen in this Jan. 23 photo. Yonhap Chipmaking giant SK hynix has surpassed its biggest rival, Samsung Electronics, for the first time ever in terms of quarterly profit, data showed Tuesday, as robust sales of artificial intelligence (AI) memory chips pushed up its fourth-quarter figures to record highs. According to its quarterly earnings report, SK hynix posted a record 8.08 trillion won ($5.62 billion) in operating profit for the October-December period, up 15 percent from a year earlier. In comparison, Samsung Electronics estimated its fourth-quarter operating profit at 6.5 trillion won, including some 3 trillion won from the semiconductor division. The tech giant has yet to disclose its final earnings results. It marks the first time SK hynix has outperformed Samsung Electronics, whose diverse business spans home appliances, mobile devices and semiconductors, in quarterly operating profit. For the entire 2024, SK hynix's annual operating profit totaled a record 23.47 trillion won, while Samsung Electronics' chip division is forecast to earn around 15 trillion won. SK hynix's stellar performance was fueled by strong demand for premium high bandwidth memory (HBM) chips amid the generative AI boom, despite sluggish demand for conventional memory chips used in smartphones and personal computers. SK hynix has dominated the HBM market since it began providing its HBM to Nvidia Corp., whose graphic processing units (GPUs) are critical for AI computing. In the fourth quarter, HBM sales accounted for more than 40 percent of the company's DRAM sales, up from 30 percent in the previous quarter. "SK hynix has a portfolio of higher value-added products than its competitors, making it less affected by market downturns," said Ryu Young-ho, an analyst from NH Investment & Securities. Samsung Electronics, the world's No. 1 memory chipmaker, has been struggling to boost its profit as its HBM has yet to hit the global market. SK hynix, which currently supplies nearly all of its HBM shipments to Nvidia, is expected to maintain its leadership in this market for some time. Earlier, the company announced its development of the 16-layer HBM3E chips in November, along with its plans to begin mass-producing the sixth-generation HBM4 in the second half of 2025, further solidifying its position in the industry. (Yonhap)

SK hynix becomes most profitable Korean company in Q4 2024

SK hynix's high-bandwidth memory 3e chip is displayed at the company's booth for CES 2025 at the Las Vegas Convention Center, Jan. 6 (local time). Yonhap Chipmaker plans to mass-produce 12-layer HBM4 chip this yearBy Nam Hyun-woo SK hynix posted multiple record highs in its 2024 earnings, boosted by the robust sales of its high-bandwidth memory (HBM) chips tailored specifically for artificial intelligence (AI) computing. Building on this momentum, SK hynix expressed confidence in its prowess in the HBM chip market during its earnings call, Thursday, projecting its HBM chip sales to double this year. It also announced plans to begin the mass production of its next-generation 12-layer HBM4 chip this year. SK hynix reported revenues of 66.19 trillion won ($46.06 billion) for 2024, nearly doubling from 32.77 trillion won in 2023. During the same period, its operating profit achieved a significant turnaround, reaching 23.47 trillion won, compared to an operating loss of 7.73 trillion won the previous year. The company's operating margin stood at 35 percent for 2024. The 2024 annual revenue shattered its previous record of 44.62 trillion won in 2022 by 21 trillion won, and the operating profit also outpaced the earlier high of 20.84 trillion won in 2018, when the global memory chip market was in an upcycle. On a quarterly basis, SK hynix's fourth-quarter sales stood at 19.77 trillion won, a 75 percent increase from 11.3 trillion won a year earlier, and the operating profit in the October-December period reached 8.08 trillion won, growing 2,236 percent from 346 billion won in the fourth quarter of 2023. The handsome earnings lifted SK hynix to the position of the most profitable company in Korea by quarterly operating profit, surpassing Korea's biggest firm Samsung Electronics, which anticipated earlier this month that its fourth-quarter operating profit would reach 6.5 trillion won. With its earnings, SK hynix also solidified its position as the global leader in the memory chip industry, a title it also claimed in the third quarter of 2024. Its rival, Samsung Electronics' semiconductor division, is estimated to have recorded an operating profit of around 3 trillion won for the fourth quarter of last year. "We achieved record-breaking results thanks to strong demand for AI memory chips, our industry-leading HBM technologies and a management strategy focused on profitability," the company said in a statement. "HBM continued its significant growth in the fourth quarter, accounting for over 40 percent of our total DRAM revenue, while sales of enterprise solid-state drives (eSSDs) continued to expand." SK hynix's HBM3e memory is installed in Nvidia's GB200 Grace Blackwell Superchip at the SK hynix booth for CES 2025 at the Las Vegas Convention Center, Jan. 7 (local time). Korea Times photo by Nam Hyun-woo During the earnings call, the company noted that its annual HBM revenue for last year increased by more than 4.5 times compared to 2023, after it began supplying the fifth-generation 12-layer HBM3e chips to clients in the fourth quarter. "We expect over a 100 percent growth in HBM sales, driven by strong demand for customized chips such as application-specific integrated circuits," the company said. "Within the first half of this year, HBM3e will account for more than half of our HBM... And also, we believe 12-layer HBM 4 will be our flagship product in 2026, and will finish developing and mass-producing 12-layer HBM4 this year, so that we can deliver it to customers on schedule." Read MoreSK hynix to showcase 16-layer HBM3e chip at CES 2025 The sixth-generation HBM4 chip is anticipated to become the dominant force in the AI memory market, offering twice the number of data transfer channels compared to the HBM3e chip, which enables faster data transfer speeds and greater memory capacity. It is also expected to be a customized solution, tailored to meet specific workloads based on clients' needs. Leading memory chip makers -- SK hynix, Samsung Electronics and Micron -- are engaged in intense competition to secure an early lead in the HBM4 chip market, driven by the growing demand from AI processor companies like Nvidia for memory chips offering higher performance and better power efficiency. "We aim to complete the development and preparation for mass production of HBM4 in the second half of this year and begin supplying them," the company said. "The HBM4 supply will start with 12-layer chips and followed by 16-layer. The 16-layer chips are expected to be delivered in line with customer demands, likely in the second half of 2026." Since the HBM4 chip is based on customized client specifications, this requires production processes available at foundries to produce the chip's base dies. Due to this, SK hynix has partnered with TSMC, the world's leading foundry, while Samsung Electronics, which operates its own memory and foundry businesses, is also advancing its development efforts aiming for mass production this year. Along with the HBM chip, SK hynix attributed a 300 percent increase in its eSSD sales last year to strong demand from data centers. SK hynix said that the growing demand for AI memory is driving a shift toward the high-end memory market, noting that earnings show that "we are capable of generating stable profits while improving our competitiveness to supply products that meet customer demands on time." "By significantly increasing the share of high-value-added products, we have developed a business model that allows us to achieve stable profits even during market downturns," SK hynix Chief Financial Officer Kim Woo-hyun said. "Going forward, we will continue to prioritize investments in profitable products, while remaining flexible and adjusting our investments based on market changes."