Strong AI market drives unprecedented profit growth for SK hynix
SK Hynix Roars Ahead with Record Q1 Profits, AI Demand Boosting HBM Market
South Korean chip giant SK Hynix has announced staggering Q1 profits, thanks to the soaring global demand for artificial intelligence. This remarkable feat once again underscores the company's ability to navigate the mounting tariff threats.
As the world's second-largest memory chip maker, SK Hynix holds a commanding position in the high-bandwidth memory (HBM) semiconductor market and is a key supplier for tech titans like Nvidia.
The company reported an operating profit of 7.44 trillion won ($5.19 billion) – a nearly 158% year-on-year increase – on revenues of 17.64 trillion won from January to March. These figures represent the company's second-highest quarterly results on record.
The news follows Taiwanese chip giant TSMC's announcement of a surge in net profit for Q1 and forecasts of robust demand for artificial intelligence technology. TSMC's net income quadrupled compared to the previous year, with the company attributing the growth to the memory market's faster-than-expected ramp-up due to competition to develop AI systems and inventory accumulation demand.
SK Hynix expects its annual HBM sales for this year to double compared to last year. Despite the impressive results, SK hynix’s shares fell more than one percent in Seoul morning trade.
South Korea's semiconductor and auto industries could face significant suffering under President Donald Trump’s looming 25% tariffs. The country is also home to the world's largest memory chip maker, Samsung.
Experts suggest SK hynix's resilience stems from the company's growth in the DRAM market. SK hynix recently claimed the lead in DRAM revenues with a 36% market share, according to specialist research firm Counterpoint. This marks the first change in the top spot in over four decades.
"Right now the world is focused on the impact of tariffs, so the question is: what's going to happen with HBM DRAM?" said Counterpoint research director MS Hwang. "At least in the short term, the segment is less likely to be affected by any trade shock as AI demand should remain strong. More significantly, the end product for HBM is AI servers, which -- by definition -- can be borderless."
During a conference call, SK hynix acknowledged the uncertainty around demand for semiconductors but maintained sales plans for key clients remain unchanged. Global customers are, overall, maintaining their previously discussed memory demand levels with the company.
It's worth noting that while approximately three-fifths of SK Hynix's sales are to U.S.-based customers, tariffs apply only to products shipped directly to the U.S. "Even when our clients are headquartered in the U.S., memory products are often shipped to locations outside the US, meaning the actual proportion of direct exports to the U.S. is not particularly high," an SK Hynix official said.
The High-Bandwidth Memory (HBM) Market Outlook
The high-bandwidth memory (HBM) market is gaining momentum due to the surging demand from artificial intelligence and data-intensive applications. The market, anticipated to grow at a CAGR of over 26.2% from 2025 to 2034, is expected to double in HBM shipments year-over-year in 2025, driven by AI's demand for high-bandwidth memory for data-intensive tasks. Technological advancements in AI, simulations, and high-performance computing, along with the emergence of edge AI technologies, contribute to this growth.
By 2030, HBM is projected to account for nearly 50% of total DRAM revenues, reaching almost $100 billion. This growth emphasizes HBM's crucial role in meeting future computing demands. The focus on HBM and other DRAM technologies may result in shifts in capital expenditures, potentially affecting the supply dynamics and pricing of NAND and other memory technologies.
- SK Hynix's record Q1 profits, attributed to artificial intelligence (AI) demand, underscore the company's ability to navigate mounting tariff threats, even in the tech industry.
- As the second-largest memory chip maker, SK Hynix holds a commanding position in the high-bandwidth memory (HBM) semiconductor market.
- TSMC, the world's largest memory chip maker, reported a surge in Q1 profits, with growth attributed to the memory market's faster-than-expected ramp-up due to competition to develop AI systems.
- SK Hynix expects its annual HBM sales for this year to double compared to last year, largely driven by AI demand.
- AI demand for high-bandwidth memory for data-intensive tasks is expected to double HBM shipments year-over-year in 2025, making it account for nearly 50% of total DRAM revenues by 2030.
- Experts suggest SK Hynix's resilience stems from the company's growth in the DRAM market, as it recently claimed the lead in DRAM revenues.
- Despite the uncertainty around demand for semiconductors due to tariffs, SK Hynix reported that global customers are maintaining their previously discussed memory demand levels with the company.
