ICHEN, SOUTH KOREA – SK Hynix, a leader in the High Bandwidth Memory (HBM) market, has made significant waves in the semiconductor industry by reporting its highest-ever quarterly performance in the second quarter of 2024. Notably, this quarter's operating profit was double that of competitor Samsung Electronics' total operating profit, demonstrating the success of its HBM-centric business strategy. Riding on this momentum, SK Hynix plans to accelerate the development of HBM4, the next-generation HBM, further solidifying its position as a key memory supplier in the AI era.
Overwhelming Q2 Performance: HBM-Led 'Earning Surprise'
According to SK Hynix's preliminary Q2 2024 earnings announced on the 24th, operating profit surged by 68% year-on-year to 9.2129 trillion Korean Won. Revenue increased by 35% to 22.2320 trillion Korean Won, and net income was recorded at 6.9962 trillion Korean Won. These figures surpass all previous records, including the company's best performance in Q4 2023. Particularly noteworthy is SK Hynix's operating profit margin, which reached 41%. This is double Samsung Electronics' total operating profit of 4.6 trillion Korean Won for the same period, which includes its semiconductor, home appliance, and smartphone divisions, illustrating SK Hynix's overwhelming profitability secured through HBM.
This outstanding performance was driven by HBM, with the DRAM division, including HBM, accounting for 77% of total revenue. Explosive demand for HBM was fueled by increased AI investments from global big tech companies. In response, SK Hynix strategically expanded sales of its HBM3E 12-layer products, securing a leading position in the market. Both DRAM and NAND flash (NAND) recorded higher-than-expected shipments, contributing to the record-breaking performance. Thanks to the strong earnings, cash equivalents at the end of Q2 increased by 2.7 trillion Korean Won from the previous quarter to 17 trillion Korean Won, while the debt-to-equity ratio improved to 25% and the net debt-to-equity ratio to 6%, significantly strengthening financial health.
Continued HBM Growth and Accelerated HBM4 Development
SK Hynix anticipates the growth trend in the HBM market to continue into the second half of the year. Increased memory purchases by customers are leading to higher production of finished products, maintaining stable inventory levels. New product launches are also scheduled for the second half, projecting a steady increase in memory demand. Furthermore, the competition among big tech companies to enhance AI model inference capabilities is expected to further stimulate demand for high-performance, high-capacity memory. Investments in sovereign AI (AI based on domestic data and technology) by various countries are also analyzed as a new long-term growth driver for memory demand.
In line with these market forecasts, SK Hynix plans to double its HBM shipments this year compared to last year, aiming for stable earnings. The company is particularly focusing its efforts on the development of HBM4, the next-generation HBM. SK Hynix supplied HBM4 samples to customers in March and is preparing to supply them promptly when customer demand arises. The company is actively collaborating with partners to optimize HBM4 performance, continuously strengthening its industry-leading competitiveness. HBM4 is expected to offer higher bandwidth and capacity than existing HBM3E, positioning itself as a core memory for next-generation AI systems.
Expanding AI Memory Portfolio and Future Investment Plans
Beyond HBM, SK Hynix aims to diversify its AI memory product lineup to further solidify its leading position in the AI market. The company plans to begin supplying server-용 LPDDR-based modules within this year and prepare 24Gb products with expanded capacity for AI GPU GDDR7, currently supplied as 16Gb (gigabit). This strategy will allow the company to meet the diverse needs of AI chipset manufacturers and data center customers, expanding its market share.
In the NAND segment, SK Hynix will continue its cautious investment approach aligned with demand and profitability-focused operations, while also pursuing product development in anticipation of future market improvements. Specifically, the company plans to expand sales of QLC (Quadruple Level Cell)-based high-capacity enterprise SSDs (eSSDs) and build a product portfolio based on next-generation 321-layer NAND to strengthen market competitiveness. The 321-layer NAND is expected to store more data than existing NAND, addressing the increasing demand for high-capacity storage solutions.
Infrastructure investments will also continue. SK Hynix plans to open its new M15X fab in Q4 this year and utilize it for DRAM production, including HBM, starting next year. Additionally, the construction of the first fab at the Yongin Cluster, a large-scale production base, is proceeding smoothly with a target completion date in Q2 2027. These proactive investments are strategic moves to stably address the explosive increase in memory demand in the AI era and secure future growth engines.
Song Hyun-jong, President of SK Hynix, stated, "We will make some proactive investments this year for the smooth supply of key products like HBM, for which demand visibility is secured next year." He further expressed the company's ambition to grow into a "Full Stack AI Memory Provider" by timely launching products with the highest quality and performance demanded by the AI ecosystem, simultaneously driving customer satisfaction and market growth. This strategy by SK Hynix is expected to play a crucial role in consolidating its leadership in the HBM market and establishing itself as a key company leading the AI era.
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