SK hynix vows to solidify leadership in high-growth AI chip market

SK hynix, which was negatively affected by the global memory semiconductor recession last year, has managed to bounce back by recording a profit in the fourth quarter for the first time in five quarters, showing signs of a recovery in the memory semiconductor market, the company said Thursday.

The memory chip maker said that it will consolidate its technological leadership and secure profitability by focusing on selling high-performance and high-priced products such as HBM3, a memory chip for the AI market in line with the increasing demand in the AI industry, and DDR5.

In the October-December period of 2023, SK hynix recorded an operating profit of 346 billion won ($260 million). This is the first time that the company recorded a quarterly operating profit since the third quarter of 2022, when it posted 1.65 trillion won. The company also recorded sales of 11.3 trillion won, up 47 percent from a year ago.

Kim Woo-hyun, chief financial officer of SK hynix, explained that the company's return to profit in the fourth quarter was due to increased sales of high-value products such as the HBM3 and DDR5.

"Despite the long-lasting downturn, the company has solidified its technological leadership in AI memory and other areas, and has begun to swing to profit in the fourth quarter of last year," Kim said.

The company specifically announced that sales of DDR5 and HBM3 last year increased more than fourfold and fivefold, respectively, compared to 2022.

The CFO told investors during the conference call that the company will actively respond to increasing AI semiconductor demand in the AI era and secure profitability.

"As we take a new leap, we will lead the change and offer customer-tailored solutions to grow as a total AI memory provider," Kim said.

Sharing the outlook of its memory chip business this year, the CFO estimated a growth rate in the mid to late 10 percent range compared to 2023.

"This year, the PC, smartphone and server markets are expected to grow, and related memory shipments are expected to increase," Kim said. "The PC market is expected to grow with the demand for memory due to delayed replacement demand and Windows upgrades, and the opening of the AI PC market. Similarly, the smartphone market is expected to grow with replacement demand and recovery of purchasing power.”

Regarding the memory chips for server market, which accounts for a large proportion, similar to the smartphone memory market, Kim expects the market will show modest growth as the investments of server customers are forecast to increase.

The company announced that preparations for mass production of HBM3E, the faster version of HBM3, to solidify its technological leadership in the AI chip market are progressing smoothly and that it plans to start supplying customers in the first half of this year. In addition, the company added it is developing HBM4, the next-generation of AI memory chips.