SK hynix's memory chips sold out through next year upon strong demand

An artist's rendering of SK hynix's M15X fab in Cheongju, North Chungcheong Province / Courtesy of SK hynix

SK hynix set a new quarterly earnings record for the third quarter, powered by strong artificial intelligence (AI) chip sales and higher memory prices.

The chipmaker said that not only AI-specific high-bandwidth memory (HBM) chips but also other DRAM chips and NAND flash memory chips are “virtually sold out” through next year, as new AI-driven markets such as autonomous driving and robotics continue to emerge.

Describing the current boom as a “super cycle,” the company added that the limited room for production expansion will likely prolong the uptrend.

SK hynix said Wednesday during its earnings call that its operating profit stood at 11.38 trillion won ($7.93 billion) for the July-September period and its sales reached 24.45 trillion won.

Sales jumped 39 percent from 17.57 trillion won a year earlier, while operating profit surged 62 percent from 7.03 trillion won. Operating margin soared to 47 percent.

This marks a new quarterly earnings record for the chipmaker, driven by rising prices of DRAM and NAND flash memory and increased shipments of high-performance products for AI servers.

“Due to expansions in AI infrastructure, overall demand for memory chips has sharply increased,” the company said. “Sales of 12-high HBM3E chips, Double Data Rate 5 (DDR5) DRAMs for servers and other high-value products have grown, allowing us to surpass the previous quarter’s record-high earnings once again.”

In particular, shipments of server DDR5 products with capacities exceeding 128 gigabytes more than doubled from the previous quarter, the company said, adding that the sales mix of high-value enterprise solid-state drives (SSDs) for AI servers also improved.

SK hynix said the AI market is shifting rapidly toward inference-focused applications, leading clients to distribute computing workloads from AI servers to general-purpose servers and other infrastructure.

This trend is expected to result in an expansion of demand across a wider range of memory products, including high-performance DDR5 and enterprise SSDs.

SK hynix's high-bandwidth memory 4 / Courtesy of SK hynix

To cope with growing demand, SK hynix said it will expedite its transition to a 1c fabrication process, which is more advanced than the current 1b process. The company plans to expand supply by establishing a full lineup of DRAM products for servers, mobile devices and graphics applications to better respond to customer needs.

In the NAND segment, it aims to increase the supply of products based on its industry-leading 321-layer technologies to promptly meet client demand.

The company added that it has already completed negotiations for next year’s HBM supply with major clients, and the latest HBM4 products will begin shipping in the fourth quarter of this year. SK hynix completed the mass production system for HBM4 in September and began operating its new M15X fab ahead of schedule, but said “HBM supply is expected to remain tight compared with demand even in 2027.”

“As memory chipmakers prioritize their capacity for HBM production, it is creating constraints in the supply of general-purpose memory chips,” the company said during the earnings call. “Given the demand, our production capacity for not only HBM but also DRAM and NAND are virtually sold out through next year.”

SK hynix said the current memory super cycle is being driven by the integration of AI into existing applications, as well as the emergence of entirely new areas such as autonomous driving and robotics.

“Even from a conservative perspective, we expect over 30 percent growth in the HBM sector as major tech firms expand their investments,” the company said. “Our recent letter of intent (LOI) with OpenAI for DRAM supply also demonstrates the growing importance of AI memory, particularly HBM, in the development of AI technologies.”

SK Group Chairman Chey Tae-won, right, poses with OpenAI CEO Sam Altman after signing a letter of intent on supply of HBM at SK Group's headquarters in Jongno District, Seoul, Oct. 1. Courtesy of SK Group

The two firms signed the LOI earlier this month during OpenAI CEO Sam Altman’s visit to Seoul. Under the LOI, SK hynix will become a partner supplying HBM for the Stargate project, a $500 billion joint venture between OpenAI, Oracle and SoftBank for AI infrastructure in the United States.

At the time, SK hynix noted that OpenAI’s request amounts to more than twice the current global production capacity of HBM, based on wafer volume.

“With the innovation of AI technology, the memory market has shifted to a new paradigm and demand has begun to spread to all product areas,” SK hynix Chief Financial Officer Kim Woo-hyun said.

“We will continue to strengthen our AI memory leadership by responding to customer demand through market-leading products and differentiated technological capabilities.”