SK Hynix has reported revenue hit an all-time high of KRW16.42 trillion (US$11.8 billion) in the second quarter of 2024, when operating profits topped KRW5 trillion for the first time in six years.
SK Hynix stated that the ongoing rise in overall prices of DRAM and NAND products, combined with strong demand for AI memories such as HBM, resulted in a 32% surge in revenue compared to the previous quarter.
Furthermore, SK Hynix's operating margin increased by 10pp from the previous quarter to 33% in the second quarter, which was consistent with market expectations. The company credited the positive performance to higher sales of premium products and exchange currency effects.
SK Hynix has increased the proportion of high-value-added products in the DRAM sector, including HBM3E and DRAM for servers, which the company has begun mass producing since March. In particular, HBM revenues increased by more than 80% over the previous quarter and more than 250% over the same period last year, driving the company's DRAM revenue growth.
SK Hynix reported that sales of eSSD and mobile devices, in the NAND business, primarily increased in the second quarter. Sales of eSSDs climbed by around 50% over the first quarter. The company also observed that the ASP across NAND devices has been improving since the fourth quarter of last year, resulting in profit for two consecutive quarters.
According to SK Hynix, demand for AI server memory will continue to rise in the second half, while sales of high-performance memory products will increase as new PC and mobile products with on-device AI hit the market. The company believes that the overall memory product market will continue to grow steadily.
Competitive products coming
SK Hynix intends to maintain its lead in the HBM market by mass-producing 12-layer HBM3E products in the third quarter, after providing samples to important clients. The chipmaker also plans to develop 32Gb DDR5 DRAM for servers and MCRDIMM for high-performance computing in the second half of this year to preserve its competitive advantage in the DDR5 space.
SK Hynix also intends to increase the sales of high-capacity eSSD and be the market leader in the second half of this year with 60TB products for NAND products. The company anticipates that eSSD sales will more than quadruple compared to last year. SK Hynix aims to sustain its earnings growth by offering customers competitive solutions throughout its NAND product line.
Separately, SK Hynix is working on the Cheongju M15X, which is now under construction, with the goal of beginning mass production in the second half of 2025 to meet rising demand for AI memory. The company also plans to begin building on the first fab of the Yongin semiconductor cluster in March 2025 and finish it by May 2027, as planned.
In addition, SK Hynix explained that, while the annual capex may be higher than anticipated at the start of this year, the company will develop an investment strategy by closely analyzing customer demand and profitability, while ensuring financial stability by efficiently executing it within the operating cash flow.
"We were able to reduce the borrowings by KRW4.3 trillion compared to the first quarter while making essential investments during the second quarter in line with its profitability-oriented investment stance." according to SK Hynix CFO Kim Woohyun. "The company will further solidify its position as a leader in AI memory products by focusing on developing the best process technology and high-performance products based on a stable financial structure."
SK Hynix aims to maintain HBM market lead
Photo: Michael Lee, DIGITIMES, July 2024
