South Korea’s SK Hynix Sees AI Chip Boom, But Warns of Slowing Demand
Record Profit and Rising Sales
South Korea’s SK Hynix, a leading supplier of high-end semiconductors, has reported a quarterly profit record, beating estimates and outperforming rival Samsung. The company’s sales of high-end semiconductors used in generative artificial intelligence chipsets are expected to more than double this year.
AI-Driven Growth
SK Hynix’s early entry and large investments in high-bandwidth memory (HBM) chip development have given it a competitive edge in the AI-driven market. The company’s revenue for the quarter rose 75% year-on-year to 19.8 trillion won, while its operating profit was up more than 20-fold from a year earlier.
Caution on Commodity Memory Chips
However, SK Hynix warned of steeper demand declines in commodity memory chips used in smartphones and computers, citing growing Chinese competition. Shares in the company fell as much as 4.7% before recovering to trade down 0.2% at midday.
Modest Investment Plan
The company’s factory investment plan for HBM chips this year was seen as underwhelming by investors, with analysts expressing concerns about a slowdown in demand. SK Hynix said its 2025 capital expenditure would rise only slightly from last year, with investments focusing on HBM production and new factories in South Korea.
Supply Talks and Visibility
Despite concerns, SK Hynix has already begun supply talks for 2026 for the HBM chips used in AI chipsets and expects to have better visibility in the first half about shipment plans for next year. The company is confident about long-term demand for HBM chips, citing the AI industry’s potential for growth.
Advanced Chip Development
SK Hynix has begun supply of 12-layer HBM3E chips, the most advanced HBM model currently in mass production, and expects to start supplying even more advanced 16-layer HBM4 chips in the second half of 2026. The company believes Chinese rivals will face difficulties in developing advanced chips due to U.S. restrictions.
Uncertainties Ahead
Despite the company’s strong performance, uncertainties exist for the memory chip market this year, driven by trade protectionism, geopolitical risks, and inventory adjustments by PC and smartphone companies. SK Hynix’s Chief Financial Officer Kim Woo-hyun cautioned analysts about the challenges ahead.
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