SK hynix defies seasonal downturn to post surprising Q1 operating profit

A mockup showing the structure of SK hynix's high-bandwidth memory chip is displayed at the company's booth at GTC 2025 in San Jose, Calif., March 17. Courtesy of SK hynix

SK hynix far outperformed already-high market expectations for its first-quarter earnings, defying the usual seasonal downturn for chipmakers to deliver its second-highest quarterly sales and operating profit ever.

The memory chip giant announced Thursday that it recorded an operating profit of 7.44 trillion won ($5.21 billion) in the first quarter of this year, marking a 157.8 percent increase year-on-year. Revenue for the January-to-March period reached 17.64 trillion won, up 41.9 percent from the same period last year.

The numbers exceeded brokerages’ consensus of 6.6 trillion won in operating profit and 17.28 trillion won in sales. It is the company’s second-highest quarterly earnings, following its record-breaking results in the fourth quarter of last year.

The company’s operating margin also reached 42 percent, up by 1 percentage point from three months earlier, extending an uptrend for the eighth consecutive quarter.

“During the first quarter, the memory chip market recovered faster than expectations due to an accelerated race for developing artificial intelligence (AI) services and increased efforts to build up chip inventory,” the company said in a statement.

“In response, we expanded sales of high-value-added products such as 12-layer high-bandwidth memory 3e (HBM3e) and DDR5 … Despite the seasonal slowdown, we have accomplished a financial performance that proves our improved competitive strength compared to the past."

SK hynix's Icheon plant in Gyeonggi Province / Courtesy of SK hynix

Attributable to the surprising earnings was the solid sales of HBM chips, which are specific for AI accelerators.

SK hynix estimated that HBM demand will show a steady twofold increase this year despite the growing volatility in global supply chains, because supply volumes are typically agreed upon with customers a year in advance. In response, the company plans to ramp up its sales of 12-layer HBM3e to have it account for more than half of its total HBM3e revenue in the second quarter.

During its earnings call, the company tried to address the market’s concerns on the possible impacts on U.S. tariff measures. Washington is currently pausing its country-specific "reciprocal" tariffs, which initially took effect on April 9 to include 25 percent duties on Korea. Semiconductors remain exempt from the tariff, but U.S. President Donald Trump seeks to implement separate tariffs on chip imports.

“Despite the uncertainties, what we can say is that our global clients are maintaining previously discussed demand levels, and some are even accelerating orders through short-term supply pull-ins (a situation of customer requesting to receive products earlier than originally scheduled),” the company said. “What we can assure the market about our HBM business is that there has been no change from the previously agreed-upon supply levels.”

SK hynix's 12-layer HBM4 / Courtesy of SK hynix

Regarding concerns that short-term pull-ins could lead to excessive inventory buildup among customers in the second half of this year, SK hynix said the scale of these pull-ins is not large enough to cause negative effects for the company. It explained that its clients also face low visibility on U.S. tariff policies, which limits their ability to overstock aggressively.

The chipmaker also expressed confidence in the long-term sustainability of its HBM business.

“Globally, AI infrastructure expansion remains a key trend, and not only companies but also individual countries are actively building their own AI ecosystems,” the company said.

“This leaves no doubt about strong long-term demand growth for HBM. Based on current demand visibility, we project an average annual growth rate of around 50 percent for HBM from 2024 through 2028.”

SK hynix added that it expects its next-generation HBM4 to become the company’s flagship product next year, with demand showing continued momentum. Last month, the company became the first in the world to provide HBM4 samples to major clients and aims to complete mass production readiness for the 12-layer version within this year.

SK hynix's Cheongju plant in North Chungcheong Province / Courtesy of SK hynix

For future growth, SK hynix noted that it will continue expanding its production capacity. It broke ground on the first-phase fab in Yongin, Gyeonggi Province, in February, with completion targeted for the second quarter of 2027. The M15X fab in Cheongju, North Chungcheong Province, is also scheduled to begin operations in the fourth quarter of this year.

“SK hynix will focus on products with demand feasibility and profitability to enhance investment efficiency,” Chief Financial Officer Kim Woo-hyun said.

“As an AI memory leader, we will strengthen collaboration with partners and carry out technological innovation in efforts to continue profit growth with industry-leading competitiveness.”