Finance
Nvidia supplier SK Hynix reverses losses in first quarter on AI demand
SK Hynix Inc. signage at the company’s office in Seongnam, South Korea, on Monday, April 22, 2024. SK Hynix is scheduled to release earnings figures on April 25. Photographer: SeongJoon Cho/Bloomberg via Getty Images
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South Korean memory chipmaker SK Hynix on Thursday reported a net profit of 1.92 trillion South Korean won ($1.39 billion) in the first quarter, reversing a loss of 2.58 trillion won logged in the same period a year ago.
This was the first positive income recorded since the third quarter of 2022, LSEG data showed. SK Hynix posted net losses for five consecutive quarters from a slump in the memory chip market.
Revenue in the first quarter stood at 12.43 trillion won, a 144% increase from a year ago. This was the highest revenue logged since second quarter 2022, according to LSEG data.
SK Hynix attributed the strong performance to an “increase in the sales of AI server products backed by its leadership in AI memory technology including high-bandwidth memory” as well as efforts to drive profitability.
SK Hynix is the world’s second-largest memory chipmaker after Samsung Electronics and supplies high-bandwidth memory chips catering to AI chipsets for companies like Nvidia.
The explosive demand for AI chipsets boosted the high-end memory chip market, hugely benefiting players like SK Hynix and Samsung Electronics.
Large language models such as ChatGPT – which caused AI adoption to skyrocket – require a lot of high-performance memory chips as such chips allow these models to remember details from past conversations and user preferences in order to generate humanlike responses.
To meet AI memory demand, the firm said it plans to increase supply of HBM3E – the latest generation of high-bandwidth memory for AI. SK Hynix said it will also introduce 32GB Double Data Rate 5 products this year to strengthen its leadership in the high-capacity server DRAM market.
“We will continue to work towards improving our financial results by providing the industry’s best performing products at a right time and maintaining the profitability-first commitment,” said Chief Financial Officer Kim Woohyun.
The firm projects the overall memory market to grow steadily in the coming months amid rising demand for AI memory, while the conventional DRAM market starts recovering from the second half of 2024.
Pandemic-induced demand for consumer electronics led companies to stockpile memory chips. But macroeconomic uncertainties such as inflation caused consumers to cut back on purchases of such consumer goods, driving down demand and prices for memory chips.
To address the excess inventories, companies like SK Hynix cut production of its memory chips.
SK Hynix shares slid more than 4% on Thursday morning, though in the last one year, they have jumped more than 100%.
Capturing AI demand
The firm has made recent announcements to meet the AI demand.
The firm on Wednesday said it plans to build a new fab in South Korea, with an estimated completion date set for November 2025, to increase production of the next-generation DRAM including HBM to capture the proliferating demand for AI chips.
Total investment would amount to more than 20 trillion won in the long term, SK Hynix said.
SK Hynix is also partnering with TSMC, the world’s largest contract chip manufacturer, to build high-bandwidth memory 4 chips and next-generation packaging technology. Mass production of the HBM4 chips is expected to start from 2026.
SK Hynix will leverage on TSMC’s leading-edge processes, according to an April 19 statement.
JPMorgan Chase CEO Jamie Dimon said Wednesday the looming tariffs that President Donald Trump is expected to slap on U.S. trading partners could be viewed positively.
Despite fears that the duties could spark a global trade war and reignite inflation domestically, the head of the largest U.S. bank by assets said they could protect American interests and bring trading partners back to the table for better deals for the country, if used correctly.
“If it’s a little inflationary, but it’s good for national security, so be it. I mean, get over it,” Dimon told CNBC’s Andrew Ross Sorkin during an interview at the World Economic Forum in Davos. “National security trumps a little bit more inflation.”
Since taking office Monday, Trump has been saber-rattling on tariffs, threatening Monday to impose levies on Mexico and Canada, then expanding the scope Tuesday to China and the European Union. The president told reporters that the EU is treating the U.S. “very, very badly” due to its large annual trade surplus. The U.S. last year ran a $214 billion deficit with the EU through November 2024.
Among the considerations are a 10% tariff on China and 25% on Canada and Mexico as the U.S. looks forward to a review on the tri-party agreement Trump negotiated during his first term. The U.S.-Mexico-Canada Trade Agreement is up for review in July 2026.
Dimon did not get into the details of Trump’s plans, but said it depends on how the duties are implemented. Trump has indicated the tariffs could take effect Feb. 1.
“I look at tariffs, they’re an economic tool, That’s it,” Dimon said. “They’re an economic weapon, depending on how you use it, why you use it, stuff like that. Tariffs are inflationary and not inflationary.”
Trump leveled broad-based tariffs during his first term, during which inflation ran below 2.5% each year. Despite the looming tariff threat, the U.S. dollar has drifted lower this week.
“Tariffs can change the dollar, but the most important thing is growth,” Dimon said.
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