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SK hynix beats expectations with Q1 operating profit exceeding 7 trillion won

Published: 24 Apr. 2025, 16:17 Updated: 24 Apr. 2025, 22:31

SK hynix's headquarters in Icheon, Gyeonggi, is pictured in this photo taken Jan. 23. [YONHAP]

SK hynix reported a forecast-breaking first quarter on Thursday, with operating profit exceeding 7 trillion won ($5 billion), fueled by surging demand for high bandwidth memory (HBM) and a surprising boost from geopolitical uncertainties.

Despite concerns over seasonal industry slumps, tariffs and AI disruption from DeepSeek, the company delivered an operating margin of 42 percent.

In its earnings release, SK hynix said it posted 17.64 trillion won in revenue and 7.44 trillion won in operating profit between January and March. Revenue rose 42 percent and operating profit surged 158 percent compared to the same quarter last year. Though both figures dropped from the record-breaking previous quarter — by 11 percent and 8 percent, respectively — operating margin improved by one percentage point.

Shipments of DRAM and NAND flash memory declined by around 10 percent and 20 percent, respectively, but strong sales of premium products like HBM and DDR5 helped maintain profitability.

Tariff concerns turn into tailwinds

Analysts had forecast SK hynix’s operating profit to be around 6 trillion won, citing seasonal demand weakness and trade uncertainties stemming from U.S. tariff threats under the Donald Trump administration.

Yet, SK hynix’s operating profit exceeded market expectations by more than 1 trillion won.

“We expected a challenging environment for demand in Q1, but China’s consumer subsidies, intensifying competition for AI development and some restocking demand helped the memory market recover faster than anticipated,” SK hynix CFO Kim Woo-hyun said during the earnings call on Thursday.

“Global customers maintained their memory procurement plans, and some even requested early deliveries due to tariff concerns,” DRAM marketing head Kim Kyu-hyun added.

While the Trump administration has signaled plans to impose tariffs on chip imports, CFO Kim noted that such duties apply only to shipments bound for the United States. SK hynix’s U.S. revenue accounts for around 60 percent of its total sales.

“Many U.S.-based customers receive memory products outside the United States, so the direct export exposure is limited,” he explained.

SK hynix completed customer validation of 96GB CMM-DDR5, a DRAM solution product based on CXL 2.0., according to the chipmaker on April 23. [SK HYNIX]

AI disruption turns into a catalyst

The Trump administration announced restrictions on the exports of Nvidia’s low-spec H20 graphics processing units (GPU) to China on April 15. This raised concerns about its impact on SK hynix, a key HBM supplier.

But HBM sales and marketing lead Kim Ki-tae downplayed the risk on Thursday. “We can clearly state that our sales plans for major customers remain unchanged,” he said.

SK hynix expects HBM revenue to more than double this year. HBM sales lead Kim confirmed that the company is on track to meet its target of having 12-layer HBM3E chips account for more than half of HBM3E shipments in the second quarter.

The 12-layer HBM3E, the fifth generation of HBM, is the world’s most advanced memory of its kind. SK hynix became the first globally to mass-produce it in September of last year, and it will be used in Nvidia’s upcoming Blackwell Ultra AI accelerator.

Rethinking the DeepSeek shock

Earlier concerns over China’s DeepSeek, which in January introduced an AI inference model that operates efficiently with less reliance on GPUs, have not materialized into threats for SK hynix.

Instead, the emergence of DeepSeek appears to have expanded demand for memory.

“DeepSeek lowered the entry barrier to AI development, triggering a sharp increase in new projects. This has driven demand not only for HBM but also for high-capacity server DIMMs like 96-gigabyte modules,” DRAM head Kim Kyu-hyun said.

“AI infrastructure investments remain strong globally, and countries are stepping up efforts to build their own AI ecosystems. We have no doubt about the long-term growth potential of HBM,” Kim Ki-tae added.

The HBM lead projected HBM demand to grow by 50 percent annually through 2028 and confirmed that mass production for sixth-generation HBM4, including 12-layer versions, will be ready within the year.

SK hynix's sixth-generation high-bandwidth memory (HBM4) chips [SK HYNIX]

Market research firms now place SK hynix ahead of Samsung Electronics in global DRAM market share. The company credited its success to a high-margin, AI-focused product portfolio and strategic leadership in DRAM technology.

“We will continue proactive development and stable production for HBM, while managing general DRAM with a focus on profitability,” SK hynix said.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY SHIM SEO-HYUN [[email protected]]