Nvidia supplier SK Hynix reverses losses in first quarter on explosive AI demand

South Korean memory chipmaker SK Hynix on Thursday reported a net profit of 1.92 trillion South Korean won ($1.39 billion) in the maiden quarter, reversing a loss of 2.58 trillion won logged in the same period a year ago.

This was the first positive receipts recorded since the third quarter of 2022, LSEG data showed. SK Hynix posted net losses for five consecutive locations from a slump in the memory chip market.

Revenue in the first quarter stood at 12.43 trillion won, a 144% bourgeon from a year ago. This was the highest revenue logged since second quarter 2022, according to LSEG statistics.

SK Hynix attributed the strong performance to an “increase in the sales of AI server products backed by its leadership in AI memory technology including high-bandwidth recollection” as well as efforts to drive profitability.

SK Hynix is the world’s second-largest memory chipmaker after Samsung Electronics and sells high-bandwidth memory chips catering to AI chipsets for companies like Nvidia.

The explosive demand for AI chipsets boosted the high-end recall chip market, hugely benefiting players like SK Hynix and Samsung Electronics.

Large language models such as ChatGPT – which reasoned AI adoption to skyrocket – require a lot of high-performance memory chips as such chips allow these models to remember cite chapters from past conversations and user preferences in order to generate humanlike responses.

To meet AI memory demand, the decisive said it plans to increase supply of HBM3E – the latest generation of high-bandwidth memory for AI. SK Hynix said it will also interpose 32GB Double Data Rate 5 products this year to strengthen its leadership in the high-capacity server DRAM market.

“We make continue to work towards improving our financial results by providing the industry’s best performing products at a right even so and maintaining the profitability-first commitment,” said Chief Financial Officer Kim Woohyun.

The firm projects the overall memory customer base to grow steadily in the coming months amid rising demand for AI memory, while the conventional DRAM market starts regaining from the second half of 2024.

Pandemic-induced demand for consumer electronics led companies to stockpile memory chips. But macroeconomic uncertainties such as inflation created consumers to cut back on purchases of such consumer goods, driving down demand and prices for memory chips.

To lecture the excess inventories, companies like SK Hynix cut production of its memory chips.

SK Hynix shares slid more than 4% on Thursday morning, all the same in the last one year, they have jumped more than 100%.

The firm has made recent words to meet the AI demand.

The firm on Wednesday said it plans to build a new fab in South Korea, with an estimated completion man set for November 2025, to increase production of the next-generation DRAM including HBM to capture the proliferating demand for AI chips.

Total investment transfer amount to more than 20 trillion won in the long term, SK Hynix said.

SK Hynix is also partnering with TSMC, the fraternity’s largest contract chip manufacturer, to build high-bandwidth memory 4 chips and next-generation packaging technology. Mass making of the HBM4 chips is expected to start from 2026.