SK Hynix, a leading semiconductor manufacturer, has announced robust financial results for the first quarter of 2024, indicating promising growth prospects and strategic initiatives to capitalize on emerging market trends.
SK Hynix, the world’s second-largest memory chipmaker, has achieved revenues of 12.43 trillion won, accompanied by an operating profit of 2.886 trillion won ($2.1 billion), translating to an impressive operating margin of 23 percent. The net profit stood at 1.917 trillion won, reflecting a net margin of 15 percent.
A significant portion of SK Hynix’s revenue, 61 percent, was generated from its Dynamic Random Access Memory (DRAM) business, while 35 percent was attributed to NAND customers. The company supplied DRAM to Original Equipment Manufacturer (OEM) customers across various sectors, including server, PC, graphics, consumer electronics, and mobile devices. Similarly, NAND products were provided to OEM customers in mobile devices, Solid State Drives (SSD), and USB cards.
South Korea-based SK Hynix, a key supplier to Nvidia, attributed its remarkable 734 percent increase in operating profit compared to the previous quarter to the surge in sales of Artificial Intelligence (AI) server products, leveraging its expertise in AI memory technology such as High Bandwidth Memory (HBM), and a strategic focus on profitability. Additionally, the NAND business witnessed a notable turnaround, buoyed by a rising sales ratio of premium products like enterprise SSDs (eSSD) and increasing average selling prices.
Looking ahead, SK Hynix anticipates a steady growth trajectory in the memory market, driven by escalating demand for AI memory solutions and a recovery in the conventional DRAM market from the latter half of the year. Industry analysts foresee a reduction in inventory levels at both suppliers and customers, particularly in conventional DRAM, as the production of premium products like HBM requires higher capacities.
In line with its growth strategy, SK Hynix outlined plans to ramp up production of HBM3E, the first in the industry, while expanding its customer base. Moreover, the company aims to introduce 32Gb DDR5 products based on advanced technology to bolster its position in the high-capacity server DRAM segment. In the NAND business, SK Hynix intends to optimize its product portfolio and increase sales of high-performance eSSD and PCIe cSSD, catering to evolving market demands.
Furthermore, SK Hynix disclosed plans to construct the M15X fab in Cheongju, North Chungcheong Province, to bolster its DRAM production capabilities. Additionally, investments in advanced packaging facilities in Indiana and the Yongin Semiconductor Cluster are underway to enhance operational efficiency and meet escalating customer demand. Despite an initial plan for capital expenditure, SK Hynix expects a larger investment outlay for the year to align with market dynamics and bolster conventional DRAM supply.
SK Hynix Chief Financial Officer Kim Woohyun in its earnings report emphasized SK Hynix’s commitment to delivering industry-leading products and sustaining financial growth. He reiterated the company’s focus on profitability and timely product offerings to capitalize on market opportunities, particularly in the burgeoning AI memory sector.
Baburajan Kizhakedath
