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AI chip boom powers SK hynix to record 2024, capex increase expected this year

Published: 23 Jan. 2025, 09:41 Updated: 23 Jan. 2025, 16:58

PARK EUN-JEE
[email protected]

A screen at Hana Bank in central Seoul displays foreign press coverage of SK hynix's earnings on Jan. 23. [YONHAP]

SK hynix, a key memory chip supplier to Nvidia, achieved record sales and operating profit last year, driven by strong demand for high-end semiconductors such as high bandwidth memory (HBM).

The Icheon, Gyeonggi-based company reported an annual operating profit of 23.5 trillion won ($16.3 billion), marking a significant rebound from the industry downturn it faced in 2023, when it suffered an operating loss of 7.7 trillion won.

Annual sales reached 66.2 trillion won, a 102 percent increase compared to the previous year.

The figures were in line with the market consensus compiled by market tracker FnGuide.

In the fourth quarter alone, SK hynix recorded a 2,235 percent on-year surge in operating profit to 8.1 trillion won, with sales rising 74.8 percent to 19.8 trillion won compared to the same period in 2023.

The upbeat result is attributed to substantial growth in HBM sales — four and a half times that of the preceding year — as the high performance chips took up over 40 percent of SK hynix’s total dynamic random access memory (DRAM) sales.

The chipmaker projects an uptick in capital expenditure to expand production as it forecasts a 100 percent growth in HBM sales this year.

To meet the contracted orders and rising demand for the advanced DRAM range, the chipmaker will ramp up production this year with a target for the start of operations at a new factory called M15X in Cheongju, North Chungcheong, set for the fourth quarter of this year.

It will also start the construction of a mega-sized chip cluster in Yongin, Gyeonggi, this year, aiming to open in the second quarter of 2027.

The company said in a conference call that the mass production of HBM4 will take place in the second half of this year and the 16–layer version in the second half of next year.

SK Chairman Chey Tae-won boasted about the manufacturing process of HBM4 last year, saying that the company was able to move up the planned initial delivery schedule by six months.

The Korean chip producer secured stable yields for its newest manufacturing process, called 1c, and plans to adopt the process in DRAM production in the second half of this year.

Its overall financial status improved by the end of 2024, with cash equivalents rising by 5.2 trillion won to 14.2 trillion won and debt decreasing by 6.8 trillion won to 22.7 trillion won compared to the end of 2023.

"With the significantly increased portion of high value-added products, SK hynix has built the fundamentals to achieve sustainable revenue and profit even in times of market correction.” said Kim Woo-hyun, vice president and chief financial officer at SK hynix. “While maintaining the profitability-first commitment, the company will make flexible investment decisions in line with the market situation.”

BY PARK EUN-JEE [[email protected]]