Micron's strong earnings stoke hope for Samsung, SK hynix Q2 results

High-bandwidth memory chip manufactured by Korea's SK Hynix are displayed at the Reuters office in San Francisco, Calif., Jan. 13. Reuters-Yonhap

U.S. memory chip maker Micron’s strong earnings and rosy mid-term outlook are prompting expectations on the profitability of Samsung Electronics and SK hynix in the second quarter.

According to industry officials, Sunday, Samsung Electronics is expected to release its earnings guidance for the April-June period around July 7, while SK hynix will announce its financial results in late July.

Brokerages are already expecting both companies to post record earnings.

According to market tracker FnGuide, brokerage consensus forecasts Samsung Electronics to post 86 trillion won ($56 billion) in operating profit and 170.47 trillion won in revenue.

The figures would represent year-on-year increases of 1,739.6 percent and 128.62 percent, respectively, exceeding the previous record highs of 57.2 trillion won in operating profit and 133.87 trillion won in revenue posted in the first quarter just three months earlier.

SK hynix is expected to post 63.45 trillion won in operating profit and 82.89 trillion won in sales, up 589 percent and 273 percent year-on-year, respectively. The figures would also surpass the previous record highs of 37.6 trillion won in operating profit and 52.58 trillion won in sales set just three months earlier in the first quarter.

“As customers ramp up capital spending to secure an early lead in the artificial intelligence market while supply growth remains limited, the gap between semiconductor supply and demand will continue to widen, making memory chip prices rise more sharply,” Daishin Securities analyst Ryu Hyung-keun said.

The Micron logo is seen in this illustration taken June 11. Reuters-Yonhap

Boosting such optimism were Micron's fiscal third-quarter earnings announced last week. The world's third-largest memory chipmaker reported fiscal third-quarter revenue of $41.46 billion, growing 345.7 percent from a year earlier to hover above market consensus.

Noteworthy in Micron’s announcements is that it has secured “16 Strategic Customer Agreements,” which guarantee approximately $100 billion in minimum cumulative revenue through 2030. The agreements, spanning the data center, consumer and automotive segments, include three- and five-year contracts, which the company said would “fundamentally transform” its business model.

Historically, memory chip supply agreements were largely dictated by customers, with contracts typically lasting a quarter or half a year, or based on spot transactions. But as demand has continued to far outpace supply in recent months, the market has shifted in favor of suppliers, leading not only Micron but also Samsung Electronics and SK hynix to expand long-term agreements, suggesting the memory business is becoming less exposed to its traditional up-and-down cycle.

During its first quarter earnings call, Samsung Electronics said that major customers are increasingly requesting mid- to long-term volume commitments, and it has completed such agreements with several customers. SK hynix also said in a conference call that it is limited from accommodating all customer requests on long-term agreements due to supply bottleneck.