Nvidia Supplier SK Hynix Reports Record-Breaking Quarterly Profit As AI Demand Drives 7% Revenue Surge

SK Hynix (OTC:HXSCF), a major memory chipmaker and a key supplier to Nvidia Corp. (NASDAQ:NVDA), has announced a record-breaking quarterly profit, driven by the rising demand for artificial intelligence technology.

What Happened: The South Korean semiconductor company posted revenues of 17.5731 trillion won ($12.65 billion), a 7% increase from the previous quarter. Operating profit surged to 7.03 trillion won ($5.06 billion), and net profit reached 5.7534 trillion won ($4.14 billion), marking significant gains from last year.

This marks SK Hynix's highest-ever quarterly revenue, surpassing the previous record of 16.4233 trillion won set in the second quarter of 2024.

The company attributed this growth to increasing sales of premium memory products, such as high-bandwidth memory (HBM) and enterprise solid-state drives (eSSD), which cater to the booming demand for AI servers.

In the third quarter, HBM accounted for 30% of SK Hynix's total DRAM revenue, with sales of the product jumping more than 70% quarter-over-quarter. The company expects HBM's share to rise to 40% in the fourth quarter as it ramps up production of the newer 8-layer and 12-layer HBM3E models, reflecting strong demand from data centers and AI developers.

"SK Hynix has solidified its position as the world's No.1 AI memory company by achieving the highest business performance ever in the third quarter of this year," said Kim Woohyun, Vice President and Chief Financial Officer at SK Hynix. "We will continue to maximize profitability while securing stable revenues by taking flexible product and supply strategies in line with market demand."

SK Hynix projects the demand for AI memory to remain robust in 2025, fueled by advancements in generative AI and artificial general intelligence. Additionally, the company expects steady growth in the PC and mobile markets, which have lagged behind the AI sector.

The company plans to enhance its NAND operations by expanding sales of high-capacity eSSDs and optimizing production efficiency. It will also continue transitioning to more advanced DRAM technologies, securing its leadership in the AI memory market.

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Why It Matters: This announcement comes after a period of volatility for SK Hynix. In September, the company’s shares plummeted to their lowest level since February following a downgrade by Morgan Stanley. The investment bank warned that “memory conditions are beginning to deteriorate,” and that it would be challenging for SK Hynix to maintain revenue growth and margins.

However, the company’s fortunes quickly turned around when it announced the mass production of its latest high-bandwidth memory chips. This development, which positioned SK Hynix ahead in the competitive race to meet the growing demand driven by AI advancements, led to a 9% surge in the company’s shares.

Analysts have long been optimistic about SK Hynix’s future, with many predicting that the company will continue to benefit from the increasing demand for AI technology. In July, for example, Goldman Sachs and Citigroup both raised their stock-price targets for SK Hynix, citing the high potential for AI and the anticipation of a positive surprise in the company’s earnings.

Price Action: SK Hynix is currently trading at 1,98,300 won, with a surge of 1.17% on Thursday. The stock has gained 39.26% year-to-date, according to data from Benzinga Pro.

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Image via SK Hynix

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.