SK Hynix reports record third-quarter revenue driven by surging AI memory demand, with forecasts indicating continued supply constraints through 2030.
SK Hynix Achieves Historic Financial Milestone
SK Hynix has announced unprecedented third-quarter results, with revenue soaring to 104.6 trillion won (approximately $78 billion), marking a 328% increase year-on-year. The company's operating profit reached 83.3 trillion won ($65.5 billion), a staggering 632% rise, resulting in an impressive operating margin of 80%.
This quarter's results are particularly noteworthy as it is the first time SK Hynix has exceeded 100 trillion won in quarterly sales. Despite a net income of 39.8 trillion won, which represents a 216% increase from the previous year, it has decreased by 58% from the previous quarter due to significant non-operating expenses, including currency losses and investment valuation losses.
Continued Demand for Memory Products
The company forecasts that the demand for memory chips will continue to outstrip supply until at least 2030, with its DRAM and high-bandwidth memory (HBM) products already effectively sold out through 2029. DRAM is crucial for various devices, while HBM is essential for AI processors.
CFO Kim Woo-hyun emphasized that the complexities of advanced production processes and the time required for new facilities contribute to the ongoing supply-demand imbalance. He stated, "A situation where supply cannot keep up with demand is expected to persist for some time, a constraint projected to continue through 2030."
Long-term Contracts Secure Future Production
To address the overwhelming demand, SK Hynix has secured long-term agreements with 14 major customers, including leading cloud service providers. These contracts account for over 50% of its production capacity for 2027 and 2028, ensuring stability in pricing and supply.
As the company prepares for increased investment in 2027 with the full-scale operation of its Yongin chip complex, CEO Kwak Noh-Jung highlighted strong year-on-year growth in cloud revenues among major clients and a significant increase in cloud order backlogs. This indicates robust demand for AI infrastructure despite tightening financing conditions in the sector.
While SK Hynix anticipates a decline in memory demand from PC and smartphone manufacturers due to rising prices, it remains optimistic that the strong demand from AI infrastructure will compensate for this downturn.
