South Korean SK hynix, one of the leading memory chip manufacturers, reported a significant increase in operating profit for the third quarter. Operating profit is profit from core operations before taxes and interest. The figure reached 83.33 trillion won (about 62.8 billion dollars), up 632% from a year earlier.
Revenue for July-September was 104.61 trillion won. Net profit rose 215.7% compared with last year and reached 39.77 trillion won. However, this result was below the average analyst forecast, which, according to Yonhap, was 59.67 trillion won.
The company attributes the success to the artificial intelligence boom: productivity gains and new sources of revenue in software development, customer service and search are driving AI adoption, creating a virtuous cycle of growth in chip consumption. SK hynix is a key supplier of high-speed HBM (High Bandwidth Memory) for the American company Nvidia. Such memory is needed to process large volumes of data in generative AI models.
At the same time, SK hynix announced an additional program to return 60 trillion won to shareholders after completing the previous one worth 40 trillion won. The decision came amid concerns about the sustainability of spending on AI by American technology giants, which has noticeably pushed the company's shares down since June. In addition, last week SK hynix abandoned the planned U.S. listing of shares in its Solidigm unit because of market volatility - strong price fluctuations.
Analysts note that demand for conventional DRAM memory and NAND flash memory is also growing, and DRAM prices have soared because of a global shortage. According to Counterpoint expert MS Hwang, long-term agreements with major clients, including Nvidia, point to a new wave of price increases and allow for the expectation that quarterly profit has not yet peaked and that growth will continue at least until 2027.
At the same time, Omdia analyst Sheng Win Chau warns of contrasting risks: in the third quarter, global smartphone shipments fell 20% because of the reallocation of capacity to HBM and the rising cost of conventional memory. Conventional DRAM for smartphones and PCs yields lower margins but more predictable cash flow, whereas HBM is tied to the boom in AI infrastructure construction, which is financed with debt. According to Chau, tighter lending makes the balance between these areas a matter of risk management, not just profitability.
Against the backdrop of the report, SK hynix shares rose 10.9% on Wednesday, pulling the Kospi index up by more than 6%. However, since June the stock has been under pressure: investors believe record results are already priced in. Sejong University professor Kim Dae-jong recalled that the stock market reflects expectations of the future and expressed doubt about the sustainability of the current profit level in a year or two.