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
Bloomberg | Bloomberg | Getty Images
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.
Brian Armstrong, chief executive officer of Coinbase Global Inc., speaks during the Messari Mainnet summit in New York, on Thursday, Sept. 21, 2023.
Michael Nagle | Bloomberg | Getty Images
Coinbase shares soared more than 20% on Tuesday and headed for their sharpest rally since the day after President Donald Trump’s election victory following the crypto exchange’s inclusion in the S&P 500.
S&P Global said in a release late Monday that Coinbase is replacing Discover Financial Services, which is in the process of being acquired by Capital One Financial. The change will take effect before trading on Monday.
Stocks added to the S&P 500 often rise in value because funds that track the benchmark will add it to their portfolios. For Coinbase, it’s the latest sharp move in what’s been a volatile few months since Trump was elected to return to the White House.
Coinbase shares rocketed 31% on Nov. 6, the day after the election, on optimism that the incoming administration would adopt more crypto-friendly policies following a challenging and litigious four years during President Joe Biden’s term in office.
The company and CEO Brian Armstrong were key financial supporters in the 2024 campaign, backing pro-crypto candidates up and down the ticket. Coinbase was one of the top corporate donors, giving more than $75 million to a PAC called Fairshake and its affiliates. Armstrong personally contributed more than $1.3 million to a mix of candidates.
While the start of the Trump term has been mostly favorable to the crypto industry, through deregulation and an executive order to establish a strategic bitcoin reserve, legislation has thus far stalled. That’s due in part to concerns surrounding Trump’s personal efforts to profit from crypto through a meme coin and other family initiatives.
Coinbase has been on a roller coaster as well, plummeting 26% in February and 20% in March as Trump’s tariff announcements roiled markets and pushed investors out of risk. With Tuesday’s rally, the stock is now up about 2% for the year.
Since going public through a direct listing in 2021, Coinbase has become a bigger part of the U.S. financial system, with bitcoin soaring in value and large institutions gaining regulatory approval to create spot bitcoin exchange-traded funds.
Bitcoin spiked last week, topping $100,000 and nearing its record price reached in January. The crypto currency surpassed $104,000 on Tuesday.
To join the S&P 500, a company must have reported a profit in its latest quarter and have cumulative profit over the four most recent quarters.
Coinbase last week reported net income of $65.6 million, or 24 cents a share, down from $1.18 billion, or $4.40 a share a year earlier, after accounting for the fair value of its crypto investments. Revenue rose 24% to $2.03 billion from $1.64 billion a year ago.
The company last week also announced plans to buy Dubai-based Deribit, a major crypto derivatives exchange for $2.9 billion. The deal, which is the largest in the crypto industry to date, will help Coinbase broaden its footprint outside the U.S.
WATCH: Bitcoin surges past $100,000
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