SK Hynix announced record earnings for the fourth quarter on Thursday. The surge in demand for High-bandwidth Memory (HBM), which is used to power AI servers, was one of many factors that contributed.
Revenue of 19,77 trillion won (approximately $13.7 billion) was up by 75% compared with the previous year, while operating profit reached 8,08 trillion won. This represents a 2,236% rise versus last year’s same-period figures.
SK Hynix credited the results of its AI servers and HBM technology for their strong performance.
“With prolonged strong demand for AI memory, the company achieved all-time high results through world-leading HBM technology and profitability-oriented operations,” SK Hynix said in its earnings release.
Shares of SK Hynix fell Thursday
SK Hynix has acknowledged that demand for AI memory in 2025 is uncertain.
Stocks of the company fell by 2.7% Thursday after CFO Kim Woohyun said that inventory adjustments made by PC and Smartphone manufacturers, as well as stronger trade protection policies and geopolitical risk were clouding the outlook for 2025 memory demand.
In 2025, DRAM is forecast to increase by an average to high teens percentage while NAND is predicted to only grow by low teens percentage.
NAND chips are a crucial source of revenue for NAND, as they often co-exist with DRAM.
During its earnings call, SK Hynix’s management stated that it could experience a “slight” increase in the capital expenditure of the company in 2025 compared to the previous year.
SK Kim of Daiwa Capital Markets said that SK Hynix fourth-quarter results were “quite robust,” adding, however, that investors might be worried about the beginning of an adjustment phase.
He said that SK Hynix would maintain a leading position within HBM.
How did SK Hynix grow its earnings?
HBM chips that stack DRAM horizontally for improved speed and efficiency were a major factor in SK Hynix’s record-breaking performance.
In Q4, these chips accounted for 40% of DRAM revenues. SK Hynix, a major supplier of Nvidia’s AI chips, plans to release its HBM4 next-generation HBM4 chip in 2025.
Sanjeev Rana is an analyst with CLSA Securities Korea. He said that “SK Hynix would be a major beneficiary of Stargate”.
It will be a while before competitors catch up.
The company’s fourth quarter earnings capped a record-breaking year, with SK Hynix surpassing the previous revenue high set in 2022 by more than 21 trillion won.
Operating profit also surpassed a previous record, set in 2018, during the “super-boom” of 2018 in semiconductors.
AI Race: Staying on top
SK Hynix is committed to staying on the cutting edge of AI, and has increased investments in packaging research.
It plans to invest $3.9 billion in Indiana for an advanced packaging facility, as well as a research centre that will focus on AI-based products. This is in addition to a $15 Billion investment in South Korean operations.
SK Hynix, a Korean company that dominates the HBM market, remains committed to innovation as its competitors such as Samsung and Micron intensify their efforts.
SK Group chairman Chey Tae Won met with Nvidia founder Jensen Huang recently to discuss deeper cooperation.
Chey Tae Won, SK Hynix’s CEO told journalists at the CES show in Las Vegas that SK Hynix had accelerated its development pace to meet Nvidia demands.
The post Why SK Hynix’s shares fell despite a 2000% increase in operating profits may change as new information becomes available.
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